2. ii CENTURY 21 ® NEW MILLENNIUM
BUILDING YOUR BUSINESS
3. iiiiiiNEW AGENT TRAINING MANUAL - FULL IMMERSION IN REAL ESTATE
FIRE Table of Contents
TAB Section Title
PRE-FIRE Pre-FIRE Package review, FIRE Orientation
1 Overview
2 Career in Real Estate, Financing
3 Financing, Goal Setting / Business Planning, Tell 21
4 The Power of MRIS, Open House, Behavior Patterns
5 Buyer’s Process, Showing The Property
6 Contract, Red Flags
7 Buyer’s Presentation
8 Selling Process / Preparating a CMA
9 Tool Kit CMA
10 C21NM Websites, eGreetings, RREIN Content, Mobile
11 Escrow Accounts, Trust Monies and Deposits
12 Survey
4. iv CENTURY 21 ® NEW MILLENNIUM
BUILDING YOUR BUSINESS
5. Pre- Guidelines
CENTURY 21 ® NEW MILLENNIUM FIRE GUIDELINES FOR BRANCH LEADERS
FIREFULL IMMERSION in REAL ESTATE
FIRE
8. 11FIRE GUIDELINES FOR BRANCH LEADERS
FIRE GUIDELINES FOR BRANCH
LEADERS
1. All agents must have completed all company paperwork, with the FIRE Pre-Class
Introduction packet having been reviewed and signed by the agent. A copy of
signed commitment Form 3a must be submitted to Adriene Pessel prior to the first
class day.
2. Registration is “first come, first served” according to seat availability. Branch Leaders
must ensure that their agents come to their second day of FIRE class with their real
estate license having been received by their branch, full access to MRIS with their
own ID and password, and a functioning C21NM e-mail address. At All agents must
have 100 names in business builder by Day three of FIRE, If the agent does not have
100 names is Business builder, then agent will not be able to continue with FIRE
until their SOI reaches 100.
3. The dress code for class is “business casual.” Agents will be prospecting and meeting
the public frequently before, during, and after class sessions.
4. Agents are expected to attend every class.Agents are expected to attend every class.
If any session is missed, the agent may make it up on the appropriate day during
the next FIRE class cycle. There will be no makeup classes beyond the end of the
second cycle and students with missed classes will not receive FIRE completion
credit.
5. Branch Leaders interact directly with new agents during the interview and hiring
process. As a hiring pre-condition, Branch Leaders are responsible for insuring that
each new agent completes Forms in the pre-FIRE Congratulations introduction
packet, as well as distributing course schedules, prospecting requirements,
attendance rosters, sample business plans, the Orientation Checklist, and any other
pre-FIRE documents. Agents attending class without completed prerequisites will
be allowed to attend that day’s instruction, but will be told to immediately see their
Branch Leaders at the end of the day to complete any missing documentation.
9. 2 CENTURY 21 ® NEW MILLENNIUM
PRE-FIRE GUIDELINES
FIRE TRAINING COMMITMENT AGREEMENT
I, __________________________________ , agree to complete all assignments in
CENTURY 21® New Millennium’s FIRE training program because I intend to develop a
plan to become a successful, professional REALTOR®.
I agree to meet weekly with my Branch Leader to review my progress and discuss plans for
the coming week’s work.
I understand that completing my training according to the standards set in CENTURY
21® New Millennium’s FIRE program is the most beneficial way to begin my career as a
professional REALTOR®.
To help ensure that I receive the most benefit from my training, I expect my Branch Leader
to:
• Meet with me weekly for at least one-half hour
• Help me prioritize my activities
• Provide assistance in my development of specific business methods
• Provide me with resources I need to complete my assignments
• Provide support and encouragement as necessary to help me begin a
successful career as a professional REALTOR®.
I understand that this is my business and I agree to manage it according to the principles
taught to me in CENTURY 21® New Millennium’s FIRE program. My goal is to become a
successful, high producing, professional REALTOR®.
I will make a dedicated commitment to attend consecutive training sessions as outlined in
the FIRE schedule. I have made arrangements with my employer to take advance leave, if
necessary, to attend training.
Agent Signature ___________________ Branch Manager Signature _______________
Agreement Date: __________________ Program Completion ________________
FIRE PRE-CLASS INTRODUCTION Form 1
10. 3FIRE GUIDELINES FOR BRANCH LEADERS
PRE-FIRE GUIDELINES
FIRE TRAINING COMMITMENT AGREEMENT
CENTURY 21® New Millennium offers education and training in the tools and systems of
the company, including basic training and support from a designated Production Coach and
a Branch Leader. This begins with your completion of Pre-FIRE entry assignments discussed
with you by your Branch Manager or Branch Leader. Upon hire, an intensive 12 week Full
Immersion in Real Estate (FIRE) training program commitment is required of all full time
agents. The FIRE training program is designed to accelerate your professional development
with good prospecting, listing, and selling skills. Your Production Coach will provide you
with assistance, training, and support commensurate with your commitment to proactive
prospecting and production. Training shall include, but not be limited to the following
subjects:
• Company and Branch Orientation • Mortgage Services
• Prospecting • Fair Housing
• Building Your Business • Goal Setting
• Buyer Services • Business Planning
• Contracts and Addenda • Business Development and Relocation
• Seller Services • Scripting and Role Playing
• Listing Presentations • Company “One Stop Service” Systems
• Negotiating and Closing • Technology Tools and Systems
• Title Services • Continuing Education
• Property Management Services • Marketing and Contact Management
Systems
Your FIRE training concludes with the successful completion of the basic program.
FIRE/Peak ProducerTraining (FIRE/PP) Fee Structure
The cost of the combined proprietary Full Immersion Real Estate and Buffini Peak Producer
Training (FIRE/PP) is $750.00. If the agent so desires, as a convenience to our agents, CENTURY
21 New Millennium will advance the entire $750 and simply deduct $375 out of the agent’s
commission check from the first two closings. This advance shall be due and payable no later
than 12 months following the FIRE/PP Training graduation date. Agent will provide CENTURY
21 New Millennium a valid credit card authorization to be kept on file upon signing this
agreement. Should Agent drop out of the FIRE/PP, leave CENTURY 21 New Millennium, or fail
to complete two transactions within twelve months of FIRE/PP Graduation, the credit card on file
will be charged the remaining balance due for the FIRE/PP.
Agent Signature ____________________________ Date ____________________
Branch Leader Signature ______________________Date ____________________
11. 4 CENTURY 21 ® NEW MILLENNIUM
PRE-FIRE GUIDELINES
IN-PROCESSING CHECKLIST
OM = Office Manager
BL = Branch Leader
TC = Transaction Coordinator
PC = Production Coach
Name:________________________________ Branch:____________________
CREST Date:__________________________ Anniv Date:________________
POC Date Due Date Comp Initials
Pre-License
• Complete In-Processing Checklist OM
• Submit License Application OM
• Complete New Agent Information Form OM
• Complete Co Policy/Procedure Acknowledgment OM
• Complete Office Policy/Procedure
Acknowledgment
OM
• Complete Independent Contractor Agreement OM
• Provide Commission Schedule OM
• Complete Commission Indemnity Agreement OM
• Complete Equal Housing Acknowledgment OM
• Complete Anti-Trust Acknowledgment OM
• Complete Errors and Omissions Insurance Form OM
• Complete Credit Card Authorization OM
• Complete Misc. Forms: Auto, Liability, HR OM
• Complete Code of Ethics Form OM
• Complete IRS Status Form OM
• Create CREST EDG Temporary Entry/Screen Name OM
• Conduct Building Facilities Tour OM
• Introduce Staff/Department Personnel OM
Post License
• Order Name Badge OM
• Order Business Cards and Announcements OM
• Schedule/Obtain Web Site/Business Card Photo OM
• Assign Desk/Work Area OM
• Assign Phone Number/Extension OM
• Create/Set Up Company Email Address OM
• Edit/Provide Copy of Company Roster/Office Roster OM
• Order Name Riders and Directional Signs OM
• Submit Local Real Estate Board Membership Form OM
• Schedule RE Board Orientation Class OM
12. 5FIRE GUIDELINES FOR BRANCH LEADERS
PRE-FIRE GUIDELINES
POC Date Due Date Comp Initials
• Request/Check Lockbox Keypad OM
• Submit MRIS Membership Form OM
Awards, Recognition, and Events
• Top Producer and CENTURY 21® Awards BL
• CENTURY 21® National Events BL
• Company-wide Events BL
• Team Spirit Award BL
Technology
• Conduct Office Digital Camera Orientation OM
• Explain Digital Photo Submission Requirements OM
• Schedule PC Network Integration with IT Dept1
OM
• Explain PC Anti-Virus Requirements OM
• Schedule PDA/Phone Email Integration with IT Dept OM
Training
• Explain CENTURY 21® VSS Training Calendar BL
• Schedule Lead Router 21Online Training BL
• Explain Bi-Monthly Branch Business Meetings BL
• Zip / Auto Contract OM
• Business Builder - Minimum of 100 names entered OM
• MRIS 101, 102 OM
• DocuSign OM
1 - PC = personal computer, including notebook, laptop, and desktop configurations
13. 6 CENTURY 21 ® NEW MILLENNIUM
PRE-FIRE GUIDELINES
MRIS 101 up and running
MRIS 102 Simple solution for public record
Matrix 101 Rentals in Matrix
Matrix 211 Matrix custom displays
Keystone 101 enter a listing
Keystone 201 Document management
14. 7FIRE GUIDELINES FOR BRANCH LEADERS
PRE-FIRE GUIDELINES
DAILY SCHEDULE
Consolidated Meeting Location
Alexandria
CENTURY 21® New Millennium
Alexandria Branch Training Room
5990 Kingstowne Towne Center
Alexandria, VA 22315-5876
(703) 922-4010
Alexandria@c21nm.com
Fredericksburg
1931 Plank Road, Suite 201
Fredericksburg, VA 22401
Local Phone: 540-373-2000
Toll Free: 800-704-0048
800-997-1121
Waldorf
3292 Crain Highway, Waldorf, MD 20603
Local Phone: 301-870-8400
Production Coach/Registration Contact:
Adriene Pessel
adriene.pessel@c21nm.com
15. 8 CENTURY 21 ® NEW MILLENNIUM
PRE-FIRE GUIDELINES
FIRE PRE-CLASS INTRODUCTION
Successful REALTOR® Job Description
There are two categories of activities that real estate agents complete:
1. Business Development (prospecting, showing, selling)
2. Business Support (all other activities)
A successful real estate agent completes these activities with this priority:
1. Business Development Activities (First Priority)
A. Prospect: Find potential customers and clients by identifying and
calling on the best target markets, consistently and frequently.
B. Show and List: Sales activities generated as a result of prospecting
activities, showing homes to qualified customers, and listing marketable, qualified
properties (those that will sell in current “normal” market time).
C. Sell: The only two activities that ensure a paycheck
• Sell your Buyer Client a home
• Sell your listing
All other activities support Business Development and should be completed only to the
extent required to generate a commission check!
2. Business Support Activities (Second Priority)
These activities include any action that is not directly related to “sales” activities:
• Preview properties/tours
• Complete paperwork/sales follow-up
• Education
• Meetings
• Returning telephone calls/emails
The desired end state is to create a positive memorable experience and gain a loyal
customer for life!
16. 9FIRE GUIDELINES FOR BRANCH LEADERS
PRE-FIRE GUIDELINES
FIRE PRE-CLASS INTRODUCTION
SUCCESSFUL REALTOR® JOB DESCRIPTION
Find Many Prospects
Qualify Prospects
as Buyers
Qualify Sellers and
Properties as Marketable
Show Homes
to Qualifyed Buyers
List Marketable Homes
$$$
Sell a Home
$$$
Sell a Listing
1. Business Development (activities in the
sales cycle)
• Contacting prospects
• Following up on leads
• Qualifying buyers
• Showing homes to qualified prospects
• Writing and presenting purchase offers
• Giving listing presentations to qualified
sellers
• Listing marketable properties
• Attending offer presentations on your
listings
2. Business Support (activities that support
sales activities)
• Previewing properties
• Following up on transactions, making
flyers, etc.
• Sending out mailings (should not be
considered a prime contact method)
• Talking to loan officer and title companies
• Attending meetings
• Furthering education
• Creating listing materials
This list could be exhaustive. It’s common for agents to “hide out” in support activities because
they think they are not ready to talk to people. Watch out! This is a sign of creating the wrong
activities!
17. 10 CENTURY 21 ® NEW MILLENNIUM
PRE-FIRE GUIDELINES
FIRE PRE-CLASS INTRODUCTION Form 4
Personal operating expenses
Regular Monthly Payments
House payments (PITI, HOA/Condo fee, etc.) $ ____________
Vehicle payment (including insurance) $ ____________
Appliance, TV/Computer/Electronic device payments $ ____________
Home Improvement loan payments $ ____________
Personal loan, credit card payments $ ____________
Health plan payments $ ____________
Life insurance payments $ ____________
Other insurance payments $ ____________
Total $ ____________
Household Operating Expenses
Telephone/Internet access $ ____________
Gas and electricity $ ____________
Water $ ____________
Other household expenses, repairs, maintenance $ ____________
Total $ ____________
Personal Expenses
Clothing, cleaning, laundry $ ____________
Prescription medications $ ____________
Medical bills (physician, dentist, etc.) $ ____________
Education $ ____________
Dues $ ____________
Gifts and contributions $ ____________
Newspapers, magazines, books $ ____________
Vehicle maintenance/fuel $ ____________
Children’s school tuition $ ____________
Discretionary money and allowances $ ____________
Miscellaneous $ ____________
Total $ ____________
Food Expenses
Food (at home) $ ____________
Food (away from home) $ ____________
Total $ ____________
Tax Expenses
Federal income tax $ ____________
State income tax $ ____________
Other taxes $ ____________
Total $ ____________
Total Personal Monthly Expenses $ ____________
Total Personal Yearly Expenses (total monthly expenses x12) $ ____________
Note: This form is to be used as an initial planning document for expenses. More detailed personal
accounting can be had by using Microsoft Excel or financial accounting software like Microsoft Money
or Intuit’s Quicken.
18. 11FIRE GUIDELINES FOR BRANCH LEADERS
PRE-FIRE GUIDELINES
FIRE PRE-CLASS INTRODUCTION Form 5
YOUR REAL ESTATE BUDGET OPERATING EXPENSES
Monthly Yearly
Total Marketing Budget $ $
Professional fees (board dues, MRIS, etc.) $ $
Communication expenses (PDA, phone, Internet access) $ $
Labor/mechanical $ $
Professional development $ $
Supplies $ $
Business insurance $ $
Legal fees $ $
Licenses, permits $ $
Other $ $
Total $ $
Note: This form is to be used as an initial planning document for expenses. More detailed
personal accounting can be had by using Microsoft Excel or financial accounting software
like Microsoft Money or Intuit’s Quicken.
FIRE PRE-CLASS INTRODUCTION Form 6
PROJECTED PROFIT
Total dollars from Form 4 $
Total dollars from Form 5 $
Dreams/Fun $
Total $ needed to cover total expenses $
Desired profit $
Grand total dollars you want to earn $
Note: This form is to be used as an initial planning document for expenses. More detailed
personal accounting can be had by using Microsoft Excel or financial accounting software
like Microsoft Money or Intuit’s Quicken.
19. 12 CENTURY 21 ® NEW MILLENNIUM
PRE-FIRE GUIDELINES
BUSINESS
THE PROSPECTING SUCCESS FORMULA
Average sales price for your market $
Multiplied by the average brokerage rate received by
your company in co-brokerage transactions (.0284)
x %
Equals the average brokerage fee = $
Multiplied by your personal commission split (i.e. 50%) x %
Equals your average commission income per transaction = $
Your Annual Income Expectation $
Divided by your average commission income per
transaction
÷ $
Equals the number of transactions that you need in the
year (round up to the next higher number)
Multiplied by 300 x 300
Equals the number of contacts that you need in the year =
Divided by the number of working weeks in the year ÷ 47
Equals the number of weekly contacts that you need to
make (round up to the next higher number)
=
Divided by 5 days per week ÷ 5
Equals the number of daily contacts that you need to
make (round up to the next higher number)
=
The total transactions needed in the year
Multiplied by 2 x 2
Equals the number of listing/buyer agreements needed =
Multiplied by 3 x 3
Equals the number of appointments needed =
Divided by the number of working weeks in the year ÷ 47
Equals the number of appointments needed per week
(round up to the next higher number)
20. 13FIRE GUIDELINES FOR BRANCH LEADERS
PRE-FIRE GUIDELINES
FIRE PRE-CLASS INTRODUCTION
BUILDING YOUR SPHERE OF INFLUENCE
1. List everyone you can think of that you know.
2. Pare down the list to a manageable number that you can contact on a regular basis
(approximately 250). Remember, these people are potential business finders for you. They
are not necessarily prospects themselves for buying or selling real estate.
3. Contact members of your Sphere of Influence (SOI) several times yearly.
4. Keep track of your SOI activity. As soon as possible, enter your SOI information into
Business Builder database, so you can better manage your data. Decide what information you
want to track and the capabilities that you need...
Last Name:
First Name:
Street Address:
City:
State:
Zip Code:
Work Phone:
Work Fax:
Cell Phone:
Home Phone:
Work email address:
Home email address:
IM address:
Remarks:
Contact Record:
21. 14 CENTURY 21 ® NEW MILLENNIUM
PRE-FIRE GUIDELINES
FIRE PRE-CLASS INTRODUCTION
WHO DO YOU KNOW WHO?
Immediate family Out of town family
Recreational friends Parents of children’s friends
Merchants Former co-workers
Attorneys Neighbors
Hair stylists Former neighbors
Letter carrier Friends
Bank employees High school classmates
Corporate executives College classmates
Insurance agents Church members
Restaurant employees Club members
Vehicle salespersons Doctors
Vehicle service personnel Chiropractors
Roofers People on your holiday card list
Decorators Personal phone directory
Plumbers Spouse’s work contacts
Dry cleaners Clergy
Health club members
22. 15FIRE GUIDELINES FOR BRANCH LEADERS
PRE-FIRE GUIDELINES
201 GAME PLANAgent
Name As Of:
1. Business
Settle Units
2. Financial 3. Personal
4. Family 5. Spiritual
MEASUREMENTS:
PRIORITIES:
Agent Name here 12/08/2015
3rd QTR “Mail-Call-See Campaign ”
# Settled Transactions per month ___________
# Referrals per month ____________________
# Calls per day _________________________
# Notes per week _______________________
# Visits per week _______________________
# Mailings per month ____________________
2016 Goals
Agent Generated ________________________
Company Generated _____________________
Avg. Commission Per Side ________________
Listings Taken __________________________
Listing Conversion % _____________________
Listing Sold ____________________________
Avg. Sales Price ________________________
1st County Mortgage Loans _______________
Bay County Title Policies _________________
Friends &Family Placed___________________
Your text about your Financial goals here Your text about your Personal goals here
Your text about your Family goals here Your text about your Spiritual goals here
- Quarterly BL Coaching Sessions
- Results from QUARTERLY “Mail-Call-See Campaign”
- Century 21 Award Pacesetter Tracking
1. Set Goals 2. Mail-Call-See Campaign 3. Time Management (Calendar)
23. NEW AGENT TRAINING MANUAL - FULL IMMERSION in REAL ESTATE CENTURY 21 ® NEW MILLENNIUM
24. 1FIRE - NEW AGENT TRAINING MANUAL - TAB - 1
OVERVIEW
OVERVIEW
25. 2 FIRE - NEW AGENT TRAINING MANUAL - TAB - 1
OVERVIEW
FIRE Course Disclosure
This course manual and all its contents, both current and future, are deemed
the proprietary and confidential intellectual property of CENTURY 21® New
Millennium and NM Management, Inc.
No portion of this manual, or any of its contents, may be copied or shared with
anyone outside of NM Management’s family of companies. The agent’s use of this
material is on a “loaned” basis during the agent’s affiliation with CENTURY 21®
New Millennium, and must be surrendered upon demand or termination. Failure
to surrender this material when requested will result in a “non-surrender” charge of
$500.00 debited to the agent. The agent is also subject to all of the other provisions
as stated in the Company Policy and Procedure Manual, the Employee Agreement,
and the Independent Contractor Agreement in effect at the time of demand or
termination.
I have received the FIRE Course Manual, and I have read and understand the FIRE
Course Disclosure as stated above.
Agent Signature Date
26. 3FIRE - NEW AGENT TRAINING MANUAL - TAB - 1
OVERVIEW
CENTURY 21® New Millennium Agent Information Sheet
Name: _____________________________ Nickname: ______________________________
Email Address: _______________________________________________________________
Home Address: _______________________________________________________________
Cell Phone #: _______________________ Home Phone #: __________________________
C21NM Office Name:_________________ Office Number: __________________________
Branch Leader: _______________________ Office Manager: __________________________
I have previously attended (check all that apply): ___________________________________
CENTURY 21® New Millennium Branch Career Night: _______________________
NM University (Licensing School)
Other Licensing School (please name school)
Length of Time Actively Licensed in Real Estate: ___________________________________
Previous Occupation: _________________________________________________________
In case of emergency, who would you like us to contact?
Name:_____________________________ Relationship: ____________________________
Address: ____________________________________________________________________
Daytime Phone #: ___________________ Evening Phone #: ________________________
27. 4 FIRE - NEW AGENT TRAINING MANUAL - TAB - 1
OVERVIEW
DAILY SCHEDULE
Consolidated Meeting Location
Alexandria
CENTURY 21® New Millennium
Alexandria Branch Training Room
5990 Kingstowne Towne Center
Alexandria, VA 22315-5876
(703) 922-4010
Alexandria@c21nm.com
Fredericksburg
1931 Plank Road, Suite 201
Fredericksburg, VA 22401
Local Phone: 540-373-2000
Toll Free: 800-704-0048
800-997-1121
Waldorf
3292 Crain Highway, Waldorf, MD 20603
Local Phone: 301-870-8400
Production Coach/Registration Contact:
Adriene Pessel
adriene.pessel@c21nm.com
28. 5FIRE - NEW AGENT TRAINING MANUAL - TAB - 1
OVERVIEW
Help Desk Information
(866) 837-8181
nmhelpdesk@c21nm.com
Call Criteria:
• If you encounter any problem with software required to do real estate business on any
computer, whether it belongs to you or the company, call for assistance if you can’t resolve
the issue yourself.
• If you encounter any problem with computer related hardware (computer, printer, fax,
etc.) that belongs to the company, call for assistance.
• If you are unsure about what to do...call!
Road map to Success:
• Have a business and life plan.
• Show the public that you have the KNOWLEDGE, can be TRUSTED and you CARE about
them.
TASKS:
• Meet as many people as you can. SMILE, BE KIND, BE HELPFUL AND BE SINCERE.
• Have a minimum of 250 in SOI/ refresh by adding 3-5 per week (use a contact management
system)
• WRITE 3-5 PERSONAL NOTES PER DAY
• Know your market, keep yourself update with real estate trends.
• Know your contracts, agreements and the addenda
• Understand the lending process
29. 6 FIRE - NEW AGENT TRAINING MANUAL - TAB - 1
OVERVIEW
30. 11FIRE - NEW AGENT TRAINING MANUAL - TAB - 2
A Career in Real Estate
FLAT RENT
MULTI-FAMILY HOUSE REAL ESTATE BROKER
MOBILE HOME
31. 2 FIRE - NEW AGENT TRAINING MANUAL - TAB - 2
A CAREER IN REAL ESTATE
32. 3FIRE - NEW AGENT TRAINING MANUAL - TAB - 2
A CAREER IN REAL ESTATE
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
33. 4 FIRE - NEW AGENT TRAINING MANUAL - TAB - 2
A CAREER IN REAL ESTATE
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
34. 5FIRE - NEW AGENT TRAINING MANUAL - TAB - 2
A CAREER IN REAL ESTATE
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
35. 6 FIRE - NEW AGENT TRAINING MANUAL - TAB - 2
A CAREER IN REAL ESTATE
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
36. 7FIRE - NEW AGENT TRAINING MANUAL - TAB - 2
A CAREER IN REAL ESTATE
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
37. 8 FIRE - NEW AGENT TRAINING MANUAL - TAB - 2
A CAREER IN REAL ESTATE
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
38. 9FIRE - NEW AGENT TRAINING MANUAL - TAB - 2
A CAREER IN REAL ESTATE
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
_____________________
39. 10 FIRE - NEW AGENT TRAINING MANUAL - TAB - 2
A CAREER IN REAL ESTATE
Staying on Track
Building a Smart Calendar
40. 11FIRE - NEW AGENT TRAINING MANUAL - TAB - 2
A CAREER IN REAL ESTATE
PLAN YOUR DAY/ WEEK /MONTH/ YEAR
• Generate ___________ all leads per month
• Follow up on all leads in a timely manner
• Email listings to prospective buyers
• Email market updates to sellers
• Newsletter sent monthly
• Egreetings sent quarterly
• Financial articles posted weekly on fan page & emailed
• Choose_____________ prospects to make a personal touch with each week
• Choose_____________ prospects to personally call each week.
• Create and maintain an ongoing social media campaign/ BLOG/ Twitter/ Facebook
• Seminars: Buyer /Seller. Credit
• Open house _______________ per month
• FSBO/ EXPIRED ___________ per week
• Add______________________ people to my SOI each week
• THANK YOU NOTES EVERYDAY
41. 12 FIRE - NEW AGENT TRAINING MANUAL - TAB - 2
A CAREER IN REAL ESTATE
USE A CALENDAR/ SCHEDULE
YOUR DAY
• Understanding the Scheduling
Process
• Use a color coded system
• Reengineer your week. Use
“aha” moments. Learn and Go
• Smart Numbers and what they
mean
• Scheduling appointments
• Time off
• Prospecting time
• Call back
• Schedule Flex Time
• Color Coding
• Real estate support
• Real estate with people
• Personal time
1. ATTITUDE / APPROACH TO
TIME MANAGEMENT:
a. Value time. Time is money. Don’t just talk
about it – demonstrate it.
b. There is a direct correlation between
your attitude about time management and
achieving effective time management. There
is a direct correlation between effective time
management and success. Therefore, it is a top
priority all day long.
c. You must control your environment or it
will control you.
2. KEYS TO SUCCESS:
a. Develop and maintain a good “relationship”
with your calendar = MUST SPEND TIME
• JUST DO IT
• Get into a rhythm: plan, execute &
record results / plan, execute & record
results / plan, execute & record results
b. Set priorities and then stick with them –
adjust them when needed
c. Continually ask: “Am I making the highest
& best use of my time?” If not, start doing it.
d. Stay out of the weeds and take care of the
“big stuff” (big rocks in the jar concept).
e. Honor the two week rule.
f. Build & use “tools” to maximize / save time.
42. 13FIRE - NEW AGENT TRAINING MANUAL - TAB - 2
A CAREER IN REAL ESTATE
3. Build & work your CALENDAR
(Techniques to Build a “Balanced” Calendar)
a. Build “SMART WEEK” color code system
(see attached “Edit Labels” example):
*** Calendar toolbar > calendar coloring > edit
labels
• Green = PRI #1: PROSPECTING /
CLIENT TIME (talking to someone
about Real Estate etc. = prospecting calls
/ show homes / listing appt)
• Yellow = PRI #2: RETENTION
(coaching / training, etc)
• Orange = PRI #3: LEAD GENERATION
(Mail-Call-See Campaign support /
Social Networking, etc. = Lead Router /
Facebook / Linkedin) etc.)
• Red = FIRES / Admin
• Blue = Branch Event (A Team Mtng /
Branch Bus Mtng / etc.)
• Purple = Personal Time (Family Time /
vacations / lunch etc.)
» Grey = DID NOT CONDUCT (when
recording results)
• Branch Events (Blue):
» Bi-weekly Bus Mtng
» Monthly A-Team Webex
» Monthly Lunch & Learn
» Friday Social
» Etc. = any other Branch Related event
f. Build “self-imposed” events in sequence
based on priorities to ensure initial
“deconfliction”:
• PRI #1 = PROSPECTING / CLIENT
TIME (Green) Events:
» Prospecting = 2 hr x / day (10:00 -
11:00 am & 7:00 - 8:00 pm daily)
» Show Homes / Listing Appts (1:00 -
6:00 daily)
» Etc = Talking to Someone About Real
Estate
• PRI #2 = RETENTION (Yellow) Events:
» Monthly / QTRLY Coaching Sessions
(set same day each month = 1st Thurs
of each month 1:00-1:30)
» Monthly Team Meeting (set same day
each month = 1st Tues of each month
11:00 - 12:00)
» Weekly Team Huddle (set same
day each week = every Thurs 9:30 -
10:00)
» Etc. = Any Training Event
• PRI #3 = LEAD GENERATION
(Orange) Events:
» “Mail-Call-See Campaign” Admin
Support (9:00 - 10:00 am daily)
» CARTUS Updates
» Lead Router Analysis = daily
» Social Networking (Facebook /
Linkedin etc = 8:30 - 9:00 min daily)
» Etc. = Generating Business but not
talking to someone about Real Estate.
• FIRES / Admin Events (Red)
• Personal Events (Purple)
43. 14 FIRE - NEW AGENT TRAINING MANUAL - TAB - 2
A CAREER IN REAL ESTATE
» Personal Time (5:30 - 7:30 & 8:00 -
11:00 pm)
» Vacations & other Family related
events (TBD)
g. DECONFLICT / “CLEAN-UP”
• Conflict = de-conflict / delete
• Take notes to reschedule
h. “Work” your Calendar and maintain the
relationship (EXECUTE & RECORD RESULTS)
• Conflict = de-conflict / delete
• Take notes to reschedule
» Annually - build your Yearly Calendar
/ match Master Calendar
» Monthly - lock in at least one month
out [mid-month prior] / match Master
Calendar
» Weekly - lock in two weeks out =
“TWO WEEK RULE”.
» Daily - validate daily calendar every
AM or PM prior to departure
» Hourly - adjust accordingly as needed
and RECORD RESULTS when an event
is completed / not completed
• YES / conducted = leave color coded
• NO / did not conduct = color grey
NOTE: get into a “DAILY RHYTHM” working
your calendar. Team up with someone for
accountability purposes.
DAILY ACTIVITIES
TIME
ALLOTED
REVIEW SOI 25 Minutes
MRIS - MARKET ANALYSIS 60 Minutes
FACE BOOK - MARKETING 20 Minutes
UPDATE CALENDAR 10 Minutes
PLAN FOR NEXT WEEK 10 Minutes
MAKE CALLS 30 Minutes
LUNCH 30 Minutes
LOOK AT OPEN HOUSES 60 Minutes
CENTURY 21 WEB 10 Minutes
NAR SYSTEM 10 Minutes
E MAILS 20 Minutes
FARMING 60 Minutes
FLYERS AND NEWSLETTER 40 Minutes
44. 15FIRE - NEW AGENT TRAINING MANUAL - TAB - 2
A CAREER IN REAL ESTATE
Monday Tuesday Wednesday Thursday Friday Saturday Sunday
PROSPECTING
/ CLIENT TIME
(Talking to
someone about
Real Estate)
10:00-11:00 am
Prospecting
1:00-6:00 Show
Homes / Listing
Appt
7:00-8:00 pm
Prospecting
10:00-11:00 am
Prospecting
1:00-6:00 Show
Homes / Listing Appt
7:00-8:00 pm
Prospecting
10:00-11:00 am
Prospecting
1:00-6:00 Show
Homes / Listing
Appt
7:00-8:00 pm
Prospecting
10:00-11:00 am
Prospecting
1:00-6:00
Show Homes
/ Listing Appt
7:00-8:00 pm
Prospecting
10:00-11:00 am
Prospecting
1:00-6:00
Show Homes
/ Listing Appt
7:00-8:00 pm
Prospecting
11:00-12:00
Prospecting
1:00-6:00
Show Homes /
Listing Appt
12:00-5;00 pm
Open House
RETENTION
(Coaching /
Training)
TBD: Any TNG (PL/
CE Credit)
Team Meeting (2d
Tues Monthly)
9:30 3:00 e
(Weekly)
LEAD
GENERATION
(Mail - Call - See
Campaign:
Admin SUPPORT)
8:30-9:00 Lead
Router / Facebook
/ Linkedin
9:00-10:00 Lead
Generation Update
8:30-9:00 Lead
Router / Facebook
/ Linkedin
9:00-10:00 Lead
Generations Update
8:30-9:00 Lead
Router / Facebook
/ Linkedin
9:00-10:00 Lead
Generation Update
8:30-9:00
Lead Router
/ Facebook
/ Linkedin
9:00-10:00 Lead
Generation
Update
8:30-9:00
Lead Router
/ Facebook
/ Linkedin
9:00-10:00
Lead
Generation
Update
BRANCH RELATED
EVENTS
9:00-10:00
“A TEAM” Mtng
(1st Tues)
10:00-11:00 Bus
Mtng (1st & 3rd
Tues)
12:00-1:00 FCM
Lunch & Learn
2:30 Friday
Social
ADMIN
8:00-8:30 Admin #1
12:30-1:00 Admin #2
8:00-8:30 Admin #1
12:30-1:00 Admin #2
8:00-8:30 Admin #1
12:30-1:00 Admin #2
8:00-8:30
Admin #1
12:30-1:00
Admin #2
8:00-8:30
Admin #1
12:30-1:00
Admin #2
PERSONAL
5:30-7:30am
Personal Time
12:00-12:30 Lunch
8:00-11:00pm
Personal Time
5:30-7:30am
Personal Time
12:00-12:30 Lunch
8:00-11:00pm
Personal Time
TBD (VACATION
/ OTHER FAMILY
EVENTS)
5:30-7:30am
Personal Time
12:00-12:30
Lunch
8:00-11:00pm
Personal Time
5:30-7:30am
Personal Time
12:00-12:30
Lunch
8:00-11:00pm
Personal Time
10:00-11:30
worsship
45. 16 FIRE - NEW AGENT TRAINING MANUAL - TAB - 2
A CAREER IN REAL ESTATE
Step 1 Year at Glance
1. Block out dates that are your NON-WORKING DAYS.
2. What are peak times for showing? Block them out.
3. Weekly previewing new and resale homes.
4. Plug in open house dates.
5. Plug in charity events.
6. Plug in seminar dates.
7. Season touch base.
8. Dates for post cards / newsletter and quartery mail out.
9. Mail outs dated.
E-greetings, Newsletters, Postcards, Charity Events, Open Houses, Buyer & Seller Seminars,
Credit Advice Seminars, Seasonal Touch Bases, Market Statistics, Quarterly Market Statistics,
HUD Mail Outs, VACATION
46. 17FIRE - NEW AGENT TRAINING MANUAL - TAB - 2
A CAREER IN REAL ESTATE
Step 2
Take each MAIL/ CALL/ SEE, and administration task and write all tasks that it takes to prepare
for it.
EXAMPLES:
• Open house
• Ask agents from your office for open houses to hold (14 days out), preview them, and
select a house.
• Complete a CMA for the community for the area, preview 5 “spin off” houses (10 days out)
• Check MRIS for past rentals or rental complexes for potential buyers to invite, get addresses
or phone numbers for neighbors (10 days out)
• START your Mail/Call/See campaign for open house invitees (7 days prior to open date)
• Ask your First County Loan Officer for a rate sheet for that property to assist potential
buyers.
• Do an update on market statistics for the neighborhood (2 days prior)
• Use Toolkit to create “ buyers book” for spin off houses.
• Get signs 2 days prior/ scout out where signs should be placed
• Determine if fresh flowers or snacks are needed? (1 day prior)
• Place signs out morning of Open. (3 hrs prior)
• Open House directional signs should be removed promptly after the Open is completed.
• Write THANK YOU Notes and follow up note. (Next day)
47. 18 FIRE - NEW AGENT TRAINING MANUAL - TAB - 2
A CAREER IN REAL ESTATE
48. 11FIRE - NEW AGENT TRAINING MANUAL - TAB - 3
Financing,
Goal Setting / Business Planning,
Tell 21
49. 2 FIRE - NEW AGENT TRAINING MANUAL - TAB - 3
FINANCING, GOAL SETTING / BUSINESS PLANNING, TELL 21
Definitions and Terms
Front and Back Ratios: Criteria the
lender uses to determine the purchaser’s
buying power. Front and back ratios are
expressed as percentages, for example
36%/41% or simply 36/41. In this example,
the Front Ratio equals a maximum PITI of
36% of gross monthly income. The Back
Ration equals the purchaser’s maximum PITI
plus all debts, which can not exceed 41% of
their gross monthly income.
LTV: Loan to Value. The percent of the
value of the home that the loan represents.
For example, a 95 LTV means that the
purchaser has borrowed 95% of the lesser of
the appraised value of the home or the sales
price.
PITI: Principal + Interest + Taxes +
Insurance expressed as a monthly total (1/12
of the total annual cost).
Escrow: Monies held by another party
(lender/attorney) on behalf of another party,
normally the purchaser.
Earnest Money: The purchaser’s good
faith money. This money is held in escrow
until settlement. All principals to the
contract must agree regarding disbursement,
otherwise a court will decide.
Down Payment: A percentage of the
agreed upon sales price that the purchaser
provides towards the purchase of the house,
normally from their own funds.
Mortgage Insurance: Protects the
lender when the purchaser has a LTV greater
than 80%. If the purchaser defaults on
their loan, mortgage insurance provides a
means for the lender to recoup their loses.
Mortgage insurance is paid monthly as
part of the purchaser’s PITI. Under certain
conditions, the purchaser can petition of
have the mortgage insurance requirement
removed, typically when the property has
appreciated and the loan principal has been
paid down so that the LTV is less than 80%.
Title Insurance: The lender requires
that the purchaser obtain and pay for this
insurance to protect the lender (purchaser
coverage is optional), in case title issues are
discovered after settlement. Title insurance
is charged and paid in full at settlement. If
the purchaser refinances their loan, a lesser
fee may be charged for “bringing down title”.
Hazard/Homeowner Insurance: The
lender requires that proof of payment of
hazard/homeowner insurance be provided
at or before settlement, with adequate
coverage for the property being purchased.
Hazard/homeowner insurance normally
protects both the homeowner and the lender
from damage to the property from fire,
vandalism, and other catastrophic events.
Most hazard/homeowner policies don’t
provide flood insurance, which must be
purchased separately. This insurance is paid
annually, with one year’s premium paid at or
before settlement. Thereafter, 1/12th of the
annual premium is included as part of the
50. 3FIRE - NEW AGENT TRAINING MANUAL - TAB - 3
FINANCING, GOAL SETTING / BUSINESS PLANNING, TELL 21
purchaser’s PITI. These monies are held in
escrow until payment is due to the insurance
company.
Contract Date: The date the contract
was written.
Ratification Date: The date when all
parties agree with the terms and conditions
of the contract, and all parties have received
fully signed and initialed copies of the
contract.
Settlement Date: The day ownership of
the property is transferred.
How Much House Can Your
Homebuyer Afford?
Calculating Ratios and Rules
The following information and formulas are
used to calculate the ratios that will allow
you to estimate the loan amount and sales
price for which your home buyer will be able
to apply.
Information Your Home Buyer
Needs to Provide
• Area in which the home buyer would
like to purchase
• Length and type of mortgage program
desired
• Amount of desired down payment
• Monthly Income
• Monthly Debt
Calculating Ratios
Ratios represent a comparison between your
home buyer’s gross monthly income and his
or her monthly debt.
Front Ratio = total housing payment + gross
monthly income
Back Ratio = total monthly debt (including
housing payment) + gross monthly income
Rules:
With a down payment of less than 10%,
conventional financing typically allows
homebuyers to obtain maximum financing
with an allowable front ratio of 28% and
back ratio of 36%. If the down payment is
more than 10%, ratios can be stretched up to
33% front, 38% back. Higher ratios may be
available on other conventional programs.
FHA Financing allows your home buyers to
obtain maximum financing with allowable
ratios of 29% front, 41% back. VA Financing
allows home buyers to obtain maximum
financing with allowable total ratios of up to
41%, both front and back.
MORTGAGE SERVICES
Field Qualifying
(for approximate payment amount only)
Interest Rate Factors for a 30
Year Term (per 1,000)
4.0 % = 4.77
5.0 % = 5.37
51. 4 FIRE - NEW AGENT TRAINING MANUAL - TAB - 3
FINANCING, GOAL SETTING / BUSINESS PLANNING, TELL 21
Interest Rate Factors for a 30
Year Term (per 1,000)
5.5 % = 5.68
6.0 % = 6.0
6.5% = 6.32
7.0 % = 6.65
7.5 % = 6.99
Monthly Payment at 6%
Interest Rate
(Principal + Interest Only) (P&I)
Loan Amount (P&I)
$25,000 150
$50,000 300
$100,000 600
$200,000 1,200
$400,000 2,400
Monthly Payment at 6%
Interest Rate
(Principal + Interest Only) (P&I)
$500,000 3,000
Fairfax County Taxes: $1.085 per $100
(check your local jurisdiction for their
amount)
House
Value*
Annual Tax
Monthly
Taxes
$50,000 $500 $41.66
$100,000 $1,000 $83.33
$200,000 $2,000 $166.67
$300,000 $3,000 $250.00
$400,000 $4,000 $333.33
$500,000 $5,000 $416.67
* Tax assessment value and market value are
not usually the same.
The assessed value is usually less!
52. 5FIRE - NEW AGENT TRAINING MANUAL - TAB - 3
FINANCING, GOAL SETTING / BUSINESS PLANNING, TELL 21
Hazard Insurance:
varies depending on coverage and
deductible. An average cost is about $2.50
per $1,000, based on sales price.
House
Value
Annual
Premium
Monthly
Premium
$100,000 $250 ≈ $20.83
$200,000 $500 ≈ $42
$300,000 $750 ≈ $65
$400,000 $1,000 ≈ $85
$500,000 $1,250 ≈ $105
Field Qualifying Summary
600 P&I @ 6 %
+80 Taxes
+20 Hazard Ins
$700 (per 100,000)
350 = 50K loan
700 = 100K loan
1400 = 200K loan
2100 = 300K loan
2450 = 350K loan
2800 = 400K loan
Real Estate taxes vary among counties and
cities. Confirm the tax rate using the on-line
tax record if possible.
The rates below are $ per 100:
Fairfax
County
1.09
Charles
County
1.2
Anne
Arundel
County
1.07
St. Mary’s
County
0.969
Calvert
County
0.892
Prince
George’s
County
0.96
Arlington
County
0.958
Fauquier
County
0.97
Loudoun
County
1.285
Prince
William
County
1.204
54. 7FIRE - NEW AGENT TRAINING MANUAL - TAB - 3
FINANCING, GOAL SETTING / BUSINESS PLANNING, TELL 21
Rent vs. Buy
Processing Rentals
55. 8 FIRE - NEW AGENT TRAINING MANUAL - TAB - 3
FINANCING, GOAL SETTING / BUSINESS PLANNING, TELL 21
Rental listing
1. Transaction /Case Worksheet
2. Exclusive Right to Lease Agreement
3. Copy of MRIS print out and public
record
4. Agency Disclosure
5. Affiliated Business Arrangement
Disclosure
6. CMA (Signed by Sellers)
7. Property Disclosure/Disclaimer
8. Lead Based Paint Addendum (If
applicable)
9. Landlord’s Authorization/Waiver for
photographic services
10. Photos of home
Potential Tenant Application:
Application should be made using listing
company or management company forms.
$50.00 processing fee for each adult
applicant – Certified Funds Non
Refundable.
Earnest Money Deposit equal to one full
month’s rent. Upon approval such funds
become all/part of tenant’s security deposit.
Refundable if not approved. Other terms/
conditions are outlined on rental application
Pet deposit (if applicable) based on listing
instruction.
Deposit checks can be combined. Please be
sure that processing fees are kept separate.
All checks must be made payable either to
listing company, management company or
owner.
Processing time: 1-3 days.
The rental application should outline ways
to help expedite the processing procedure.
When your listing is rented
1. Rental Case sheet
2. MRIS Full listing
3. MRIS tax record
4. Rental Application
5. Copy of check(s)
6. Lease
56. 9FIRE - NEW AGENT TRAINING MANUAL - TAB - 3
FINANCING, GOAL SETTING / BUSINESS PLANNING, TELL 21
57. 10 FIRE - NEW AGENT TRAINING MANUAL - TAB - 3
FINANCING, GOAL SETTING / BUSINESS PLANNING, TELL 21
CREDIT SCORES
760 - 850 EXCELLENT
700 - 759 VERY GOOD
723
MEDIAN FICO
SCORE
660 - 699 GOOD
687
AVERAGE FICO
SCORE
620 - 659 NOT GOOD
580 - 619 POOR
500 - 579 VERY POOR
Rent to Income
Landlords typically require that your annual
income is at least 40 times the monthly rent.
For example, if you and your roommate are
looking at a $3,000 per month apartment,
the landlord would require a combined
income of $3,000 × 40, which equals
$120,000. To determine how much rent
you (and your potential roommates) can
afford, simply divide your combined annual
incomes by 40.
How Much Rent is
Affordable?
You might have also heard that you should
spend no more than 30% of your annual
income on rent. Spending 30% of your
yearly income on rent is widely believed to
be an affordable amount, leaving enough
money for all your other expenses.
What’s the difference between 30% and 40
times the monthly rent? Absolutely nothing,
they’re just two different ways of deriving
the same number. The 40x trick is just
easier to calculate.
For example, let’s take $120,000 of income.
1. 30% of $120,000 = $36,000.
2. $36,000 ÷ 12 months = $3,000 per
month.
But to make the calculation easier, just
divide $120,000 by 40.
1. $120,000 ÷ 40 = $3,000 per month.
Voila! Math Magic!
Again, to determine how much rent you
(and your potential roommates) can afford,
simply divide your combined annual
incomes by 40. Don’t have a calculator
handy? Use the following table to look up
your maximum rent.
59. 12 FIRE - NEW AGENT TRAINING MANUAL - TAB - 3
FINANCING, GOAL SETTING / BUSINESS PLANNING, TELL 21
Rental Guidelines
Below is a synopsis of our guidelines for
approving/declining a rental application.
Income:
• Only the incomes of two applicants will
be considered. In the event there are more
than two applicants, the lowest two incomes
will be counted.
• Only applicant income will be considered
for qualification. Co-signers may not be
used.
• Income must be verifiable to be
considered.
• Self-employed / commissioned applicants
must submit copies of Schedule C or tax
returns for the past two years.
• Applicants paid hourly must submit
copies of their W2s for the past two years.
• Applicant’s monthly income must equal /
exceed 3.5 times the rent (3.25 for military
personnel).
Assets and Liabilities:
• Monthly income times .45 must be greater
than monthly rent plus all long term debts.
• Applicants must have sufficient cash
in bank to pay deposit, first months
rent, moving expenses and a reserve for
emergencies.
Credit:
• A credit report will be run on all
applicants and all adults will be considered
as applicants.
• Lack of credit history is a valid reason for
not approving an application.
• 3 or more late payments (30 days late)
within the past 36 months will not be
accepted. An applicant with any 60+ days
late in the past 36 months will be turned
down.
• Applicants with liens, judgments,
collections or bankruptcies within the past
5 years will not be accepted.
If applicant has declared bankruptcy more
than 5 years ago, ALL credit established
after the bankruptcy must be good (no
late payments). If there has been a lien,
collection or judgment more than 5 years
ago, the debt must be paid in full in order to
consider the application.
Job History:
• Applicant needs to have maintained stable
employment for the past 3 years and there
should be some assurance of continued
employment. If employment cannot be
verified, applicant may be turned down.
Landlord References:
• Applicant must have a good reference
from current and former landlord. This
includes paying rent on time, leaving
property in good condition, giving adequate
notice of moving, etc.
• Not having a current or previous landlord
60. 13FIRE - NEW AGENT TRAINING MANUAL - TAB - 3
FINANCING, GOAL SETTING / BUSINESS PLANNING, TELL 21
or being unable to contact current or previous landlord may cause the application to be
turned down.
Other:
• All adults on the application will have their credit checked and if approved will be put on
the lease.
If the applicants are married or have a significant other, both people must be listed on the
application.
• Applicant must meet all other requirements of the landlord or agent, including, but not
limited to, pet restrictions, smoking restrictions, possession restrictions, etc. Making an
application contingent upon repairs/redecoration that an owner is not willing to do will cause
the application to be turned down.
• Multiple applications are processed simultaneously and the most qualified (if any) accepted.
• Processing will begin AFTER receipt of funds.
• Processing time is typically 2-3 business days.
61. 14 FIRE - NEW AGENT TRAINING MANUAL - TAB - 3
FINANCING, GOAL SETTING / BUSINESS PLANNING, TELL 21
FINANCING FACTS & FIGURES
Ask your loan officer these questions if you don’t know the answers.
1. What is “conventional” financing?
2. How do you determine loan to value (LTV)?
3. How much down payment do VA loans require?
4. Name a type of home ineligible for VA financing.
5. What is PITI?
6. Define a fixed rate mortgage.
7. What is a ratio?
8. The maximum allowable buydown for an FHA loan is _________.
9. To determine a “self employed” person’s income, the lender averages _________ years of
income.
10. True - False: VA approval is required on new construction.
11. True - False: If not on public water and sewer, the lender requires a clean septic and well
certificate.
62. 15FIRE - NEW AGENT TRAINING MANUAL - TAB - 3
FINANCING, GOAL SETTING / BUSINESS PLANNING, TELL 21
63. 16 FIRE - NEW AGENT TRAINING MANUAL - TAB - 3
FINANCING, GOAL SETTING / BUSINESS PLANNING, TELL 21
MORTGAGE
FINANCNG TERMS
Abstract
A concise summary of information made by
a title examiner based on his examination of
available land records.
Acceleration
The right of the mortgagee (lender) to
demand the immediate repayment of the
mortgage loan balance upon the default of
the mortgagor (borrower), or by using the
right vested in the Due-on-Sale Clause.
Adjustable Rate Mortgage
(ARM)
A mortgage in which the interest rate
is adjusted periodically based upon a
pre-selected index. Also known as the
re-negotiable rate mortgage, the variable
rate mortgage, or the Canadian rollover
mortgage.
Adjustment Interval
On an adjustable rate mortgage, the time
between changes in the interest rate and/or
monthly payment, typically one, three, or
five years, depending on the index.
Amortized Loans
Loans on which the borrower agrees to
make regular payments on principal as well
as interest to pay off the debt at the end of a
fixed period.
Annual Percentage Rate (APR)
An interest rate reflecting the cost of a
mortgage as a yearly rate. This rate is likely
to be higher than the stated note rate or
advertised rate on the mortgage, because
it takes into account discount points and
other credit costs. The APR allows home
buyers to compare different types of
mortgages based on the annual cost for each
loan.
Appraisal
An estimate of the value of a property,
made by a qualified professional called an
“appraiser”.
Assessment
A local tax levied against a property for a
specific purpose, such as a sewer or street
lights.
Assumption
The agreement between buyer and seller
where the buyer takes over the payments
on an existing mortgage from the seller.
Assuming a loan can usually save the buyer
money since this is an existing mortgage
debt, unlike a new mortgage where closing
costs, and new, probably higher, market-rate
interest charges will apply.
Balloon (Payment) Mortgage
Usually a short term fixed-rate loan which
involves small payments for a certain period
of time and one large payment for the
remaining amount of the principal at a time
specified in the contract.
Bankruptcy
64. 17FIRE - NEW AGENT TRAINING MANUAL - TAB - 3
FINANCING, GOAL SETTING / BUSINESS PLANNING, TELL 21
A provision of Federal Law whereby
a debtor surrenders his assets to the
Bankruptcy Court and is relieved of the
future obligation to repay his unsecured
debts. After bankruptcy, the debtor is
discharged and his unsecured creditors may
not pursue further collection efforts against
him. Secured creditors, those holding deeds
of trust or judgment liens, continue to be
secured by the property but they may not
take other action to collect from the debtor.
Blanket Mortgage
A mortgage covering at least two pieces of
real estate as security for the same mortgage.
Borrower (Mortgagor)
One who applies for and receives a loan in
the form of a mortgage with the intention of
repaying the loan in full.
Bridge Loan
A short-term loan made by an individual
or lending institution to “bridge” the gap
between receiving the cash from equity in
the present home and making the down
payment on the new home.
Broker
An individual in the business of assisting in
arranging funding or negotiating contracts
for a client but who does not loan money
himself. Brokers usually charge a fee or
receive a commission for their services.
Buydown
When the lender and/or the home builder
subsidized the mortgage by lowering the
interest rate during the first few years of the
loan. While the payments are initially low,
they will increase when the subsidy expires.
Caps (Interest)
Consumer safeguards, which limit the not
to exceed amount of the interest rate on an
adjustable rate mortgage. The mortgage
may change per year and/or over the life of
the loan.
Caps (Payment)
Consumer safeguards, which limit the
maximum amount of the monthly payment.
These may change on an adjustable rate
mortgage.
Cash Flow
The amount of cash derived over a certain
period of time from an income producing
property. The cash flow should be large
enough to pay the expenses of the income
producing property (mortgage payment,
maintenance, utilities, etc.).
Cash Out
Receiving money back when refinancing
your present mortgage.
Caveat Emptor
“Let the buyer beware.” The buyer should
inspect the property and be satisfied that it
is what he wants. The seller is not obligated
to disclose defects, but may not conceal a
known defect or lie if asked about it.
65. 18 FIRE - NEW AGENT TRAINING MANUAL - TAB - 3
FINANCING, GOAL SETTING / BUSINESS PLANNING, TELL 21
Ceiling
The maximum allowable interest rate over
the life of the loan of an adjustable rate
mortgage.
Certificate of Eligibility
The document given to qualified veterans,
which entitles them to VA guaranteed loans
for homes, businesses, and mobile homes.
Certificates of eligibility may be obtained
by sending DD Form 214 (Separation
Document) to the local VA office with
VA Form 1880 (Request for Certificate of
Eligibility).
Certificate of Reasonable
Value (CRV)
An appraisal issued by the VA showing the
property’s current market value.
Certificate of Veteran Status
The document given to veterans or
reservists who have served 90 days of
continuous active duty (including training
time). It may be obtained by sending DD
Form 214 to the local VA office with VA
Form 26-8261a (Request for Certificate of
Veteran Status). This document enables
veterans to obtain lower down payments on
certain FHA insured loans).
Clear Title
A title to a property that is free of legal
challenges to ownership.
Closing
The meeting between the buyer, seller,
and the lender or their agents where the
property and funds legally change hands.
Also called settlement.
Closing Costs
These usually include an origination fee,
discount points, appraisal fee, title search
and insurance, survey, taxes, deed recording
fee, credit report change and other costs
assessed at settlement. The cost of closing
is usually about 4% - 8% of the mortgage
amount.
COFI
An adjustable rate mortgage with a rate that
adjusts based on a cost of funds index,
often the 11th District Cost of Funds.
Collateral
Any property pledged to secure a loan.
Commitment
A promise by a lender to make a loan on
specific terms or conditions to a borrower
or builder. A promise by an investor to
purchase mortgages from a lender with
specific terms or conditions. An agreement,
often in writing, between a lender and a
borrower to loan money at a future date
subject to the completion of paperwork or
compliance with state conditions.
Condominium
A system of individual fee simple ownership
of portions (units) in a multi-unit structure,
combined with joint ownership of
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common areas. Each individual may sell or
encumber his own unit.
Conforming Loan
Generally, a mortgage loan under a set
amount. Qualifying ratios and underwriting
methods are standardized to a large degree.
Construction Loan
A short-term interim loan to pay for
the construction of buildings or homes.
These are usually designed to provide
periodic disbursements to the builder as he
progresses with construction.
Contract Sale or Deed
A contract between purchaser and a seller
of real estate to convey title after certain
conditions have been met. It is a form of
installment sale.
Conventional Loan
Amortized mortgage loans that are neither
FHA insured nor VA guaranteed.
Co-Signer
A person who assumes joint liability for a
loan. The co-signer of a loan agreement is
not always a co-owner.
Credit Limit
The maximum amount that may be
borrowed under a home equity plan.
Credit Report
A report documenting the credit history and
current status of a borrower’s credit standing
(fee charged by lender.
Debt-to-Income Ratio
The ratio, expressed as a percentage, which
results when a borrower’s monthly payment
obligation on long-term debts is divided by
his or her gross monthly income
Debt Service
The total amount of credit card, vehicle,
mortgage or other debt upon which you
must pay.
Deed
The written document conveying the
real property. The deed must be signed,
witnessed, and delivered to the grantee.
Once a deed is recorded at a courthouse, it
is no longer necessary to convey the title.
Deed of Trust
In many states, this document is used in
place of a mortgage to secure the payment
of a note.
Default
Failure to fulfill a contractual obligation
when it comes due such as the failure to
make a timely payment on a mortgage loan.
Deferred Interest
When a mortgage is written with a monthly
payment that is less than required to satisfy
the note rate, the unpaid interest is deferred
by adding it to the loan balance.
Delinquency
Failure to make payments on time. This
can lead to foreclosure.
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Department of Veterans
Affairs (VA)
An independent agency of the federal
government, which guarantees long-term,
low or no down payment mortgages to
eligible veterans.
Discount Point
See Points.
Down Payment
The difference between the purchase price
and that portion of the purchase price
being financed. Most lenders require the
down payment to be paid from the buyer’s
own funds. Gifts from related parties
are sometimes acceptable, and must be
disclosed to the lender.
Earnest Money
Money given by a buyer to a seller as part
of the purchase price to bind the transaction
or assure payment.
Easement
The right to use someone else’s land for a
specific limited purpose. They can be either
MORTGAGE FINANCNG
TERMS
permanent or temporary, and may include
such things as utility lines, driveways, and
ingress and egress.
Eminent Domain
The power of the state to take private
property for public use upon payment of
just compensation.
Encroachment
Anything belonging to one landowner
that extends onto an adjacent landowner’s
property is considered an encroachment.
A storage building that is a few inches
over the property line is an example of an
encroachment.
Encumbrance
A claim against a property by another party,
which usually affects the ability to transfer
ownership of the property.
Entitlement
The VA home loan benefit is called
entitlement. Entitlement for a VA
guaranteed home loan may also be called
VA eligibility.
Equal Credit Opportunity Act
(ECOA)
Is a federal law that requires lenders and
other creditors to make credit equally
available without discrimination based on
race, color, religion, national origin, age ,
sex, marital status or receipt of income from
public assistance programs.
Equity
The difference between the fair market value
and current indebtedness, also referred
to as the owner’s interest. The value an
owner has in real estate over and above the
obligation against the property.
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Escrow
An account held by the lender into which
the home buyer pays money for tax or
insurance payments. Also earnest deposits
held pending loan closing.
Fannie Mae
See Federal National Mortgage Association
Farmers Home Administration
(FmHA)
Provides financing to farmers and other
qualified borrowers who are unable to
obtain loans elsewhere.
Federal Home Loan Bank
Board (FHLBB)
The former name for the regulatory
and supervisory agency for federally
charted savings institutions. It evaluates
applications for federal charters and also
establishes
MORTGAGE FINANCNG
TERMS
liquidity requirements for its members.
This agency is now called the Office of
Thrift pervision.
Federal Home Loan
Mortgage Corporation
(FHLMC)
A quasi-governmental agency that provides
a secondary market for conventional
mortgage loans written by insured
depository institutions and HUD-approved
mortgage bankers.
Federal Housing
Administration (FHA)
A division of the Department of Housing
and Urban Development. Its main activity
is the insuring of residential mortgage loans
made by private lenders. FHA also set
standards for underwriting mortgages.
Federal National Mortgage
Association (FNMA) (also known
as Fannie Mae)
A tax-paying corporation created by
Congress that purchases and sells
conventional residential mortgages as well
as those insured by the FHA or guaranteed
by the VA. This institution, which provides
funds for one in seven mortgages, makes
mortgage money more available and more
affordable.
FHA Loan
Sometimes called FHA Insured Loan.
A loan for which the Federal Housing
Administration insures the lender against
losses the lender may incur due to the
borrower’s default. Open to all qualified
home buyers.
FHA Mortgage Insurance
Requires a fee (up to 2.25% of the loan
amount) paid at closing to insure the loan
with the FHA. In addition, FHA mortgage
insurance requires an annual fee of up to
0.5% of the current loan amount, paid in
monthly installments. The lower the down
payment, the more years the fee must be
paid.
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FHLMC
The Federal Home Loan Mortgage
Corporation provides a secondary market
for savings and loans by purchasing their
conventional loans. Also known as Freddie
Mac.
Firm Commitment
A promise by the FHA to insure a mortgage
loan for a specified property and borrower.
A promise from a lender to make a
mortgage loan.
First Mortgage
A mortgage which is in first lien position,
taking priority over all other liens (which
are financial encumbrances).
Fixed Rate Mortgage
The mortgage interest rate will remain
the same on these mortgages throughout
the term of the mortgage for the original
borrower. Payments are also fixed at one
amount
Flood Insurance
A form of hazard insurance than may be
required by the lender as a condition of
making the loan. May not cover personal
property.
FNMA
The Federal National Mortgage Association
is a secondary mortgage institution which is
the largest single holder of home mortgages
in the United States. FNMA buys VA, FHA,
and conventional mortgages from primary
lenders. Also known as Fannie Mae.
Foreclosure
A legal process by which the lender or the
seller forces a sale of mortgaged property
because the borrower has not met the
terms of the mortgage. Also known as a
repossession of the property.
Freddie Mac
See Federal Home Loan Mortgage
Corporation
Ginnie Mae
See Government National Mortgage
Association
Good Faith Estimate
A written estimate of closing costs which a
lender must provide within three days of the
borrower submitting an application.
Government National
Mortgage Association
(GNMA)
Also known as Ginnie Mae, this is
a federally controlled and operated
corporation that supports the secondary
market. It purchases and sells residential
government mortgages (FHA, VA).
Grace Period
A period of time during which a loan
payment may be paid after its due date, but
not incur a late penalty. Such late payments
may be reported on the borrower’s credit
report.
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Graduated Payment
Mortgage (GPM)
A type of flexible payment mortgage where
the payments increase for a specified period
of time and then level off. This type of
mortgage has negative amortization built
into it.
Gross Income
The income of the borrower before taxes
or expenses is deducted, for qualifying
purposes.
Guaranty
A promise by one party to pay a debt or
perform an obligation contracted by another
if the original party fails to pay or perform
according to a contract.
Hazard Insurance
A form of insurance in which the insurance
company protects the buyer from loss of
property due to hazards such as fire, hail
damage, wind, etc. for a premium.
Home Equity Line of Credit
A loan providing the buyer with the ability
to borrow funds up to the maximum
credit limit for which they have qualified.
Repayment is secured by the equity in
the home. Simple interest (interest only
payments on the outstanding balance) is
usually tax deductible. This is usually used
for home improvements, major purchases or
expenses, and debt consolidation.
Home Equity Loan
A fixed or adjustable rate loan obtained
for many purposes, secured by the equity
in the home. Interest paid is usually
tax deductible. Often used for home
improvements or investment in other real
estate. Recommended by many to replace
or substitute consumer loans, the interest of
which is not tax deductible.
Housing and Urban
Development, Department of
(HUD)
This department, created in 1965, has a
wide range of responsibilities including
the regulation of the Federal Housing
Administration and the Government
National Mortgage Association.
Housing Expenses to Income
Ratio
The ratio, expressed as a percentage, which
results when a borrower’s housing expenses
are divided by his/her gross monthly
income. See debt to income ratio.
HUD-1 Settlement Statement
A form utilized at loan closing to itemize
the costs associated with purchasing the
property. Universally used to meet HUD
regulatory requirements.
Impound
That portion of a borrower’s monthly
payments held by the lender or servicing
organization to pay for taxes, hazard
insurance, mortgage insurance, lease
payments, and other items as they become
due. Also known as reserves.
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Indemnity
A protection against actual loss or damage,
compensation for same.
Indexed Rate
The sum of the published index plus the
margin. If the index was *% and the
margin was 2.25%, the indexed rate would
be 10.25%. Lenders often charge less than
the indexed rate for the first year of an
adjustable rate loan.
Ingress and Egress
The right to go in and out over a piece of
property, but does not include the right to
park on it, as applied to easements.
Interest Rate
The basic price that equates to the demand
for and the supply of funds in the financial
markets. The quoted interest rate for
any type of loan is a combination of
several factors. Part of it is a fee for the
administrative costs of making a loan,
and another part is a premium for the
risk involved in making the loan. The
remainder is a payment for the use of the
money itself.
Interim Financing
A construction loan made during
completion of a building or a project. A
permanent loan usually replaces this loan
after completion.
Investor
A money source for a lender.
Joint Ownership Agreement
An agreement between owners defining
their rights, ownership, monetary
obligations and responsibilities. This could
be between an investor and an occupant
or between the occupants. If an investor
is involved, the investor does not take
deprecation deductions and none of the
occupant’s payment is deemed rent for tax
purposes.
Joint Tenancy
Two or more persons own a property.
Joint tenants with the common law Right
of Survivorship means that the survivor
inherits the property without reference to
the decedent’s will. Creditors may sue to
have the property divided to settle claims
against one of the owners.
Judgment
An unpaid court ordered monetary order
against a property owner.
Jumbo Loan
A loan which is larger than the limits set by
the Federal National Mortgage Association
and the Federal Home Loan Mortgage
Corporation. Because jumbo loans cannot
be funded by these two agencies, they
usually carry a higher interest rate.
Lien
A claim upon a piece of property for
the payment or satisfaction of a debt or
obligation.
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Loan to Value Ratio
The relationship between the amount of the
mortgage loan and the appraised value of
the property expressed as a percentage.
Lock or Lock-In
A commitment obtained from the lender to
“lock’ or assure a particular interest rate and
discount points for a definite time period.
This is a protection against rising interest
rates between the time of loan application
and the time of closing.
Margin
The amount a lender adds to the index on
an adjustable rate mortgage to establish the
adjusted interest rate.
Market Value
The highest price that a buyer would pay
and the lowest price that a seller would
accept on a property. Market value may be
different from the price a property could
actually be sold for at a give time.
Mechanic’s Lien
Any payment owed to a contractor for work
done on the property.
MIP (Mortgage Insurance
Premium)
Insurance from FHA to the lender against
incurring a loss because the borrower
defaults.
Mortgage Backed Securities
Securities backed by pools of mortgages.
In the case of Ginnie Mae, the securities are
issued by private institutions that Ginnie
Mae approves. The mortgages are insured
by the Federal Housing Administration
(FHA), or guaranteed by the Veterans
Administration (VA) or by the Rural
Housing Service (RHS), formerly Farmers
Home Administration (FmHA).
Mortgage Banker
Originates mortgage loans, lending their
funds and closing loans in their name.
Mortgage Broker
Similar to a mortgage banker, in that they
take loan applications and process the
paperwork, but brokers do not fund the
loan with their own money. They work for
several investors, such as mortgage bankers,
S & L’s, banks, etc.
Mortgage Insurance
Money paid to insure the mortgage when
the down payment is less than 20%. See
Private Mortgage Insurance and FHA
Mortgage Insurance.
Mortgage Loan
A loan using real estate as security or
collateral to provide for repayment in case
of default. The mortgage or Deed of Trust is
the agreement used to pledge the home or
other real estate as security.
Mortgagee
The lender in a mortgage loan transaction.
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Mortgagor
The borrower in a mortgage loan
transaction.
Negative Amortization
Occurs when the monthly loan payments
are not sufficient enough to satisfy all the
interest due on the loan. This unpaid
interest is added to the unpaid balance
of the loan. The danger of negative
amortization is that the home buyer ends up
owing more than the original amount of the
loan.
Net Effective Income
The borrower’s gross income, minus federal
income tax.
Non-Assumption Clause
A statement in a mortgage contract
forbidding the assumption of the mortgage
without the prior approval of the lender.
Note
The signed obligation to pay a debt, as a
mortgage note.
Office of Thrift Supervision
(OTS)
The regulatory and supervisory agency
for federally charted savings institutions.
Formerly known as the Federal Home Loan
Bank Board.
Origination Fee
The fee charged by a lender to prepare loan
documents, make credit checks, inspect
and sometimes appraise a property, usually
computed as a percentage of the face value
of the loan.
Owner’s Title Policy
An insurance premium charged by the
title company to insure the buyer that the
title is free from defects up to the date the
conveying instrument is recorded. The
buyer is the beneficiary.
Permanent Loan
A long term mortgage, usually ten years or
more. Also called an “end loan.”
PITI
Principal, Interest, Taxes and Insurance.
Also called monthly housing expense.
Plat
A map showing all of a property’s
boundaries.
Pledged Account Mortgage
(PAM)
Money is placed in a pledged savings
account and this fund, plus earned interest,
is gradually used to reduce mortgage
payments.
Points (loan discount points)
Prepaid interest assessed at closing by the
lender. Each point is equal to 1% of the
loan amount (i.e. two points on a $100,000
mortgage would equal $2,000).
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Power of Attorney
A legal document authorizing one person to
act on behalf of another.
Pre-approval
A process by which a potential home buyer
secures a guaranteed mortgage approval
before making an offer on a property. The
lender guarantees in writing to grant the
loan in a specific amount.
Pre-paid Expenses
Necessary to create an escrow account or to
adjust the seller’s existing escrow account.
Can include taxes, hazard insurance,
private mortgage insurance, and special
assessments.
Prepayment
A privilege in a mortgage permitting the
borrower to make payments in advance of
their due date.
Prepayment Penalty
Money charged for an early repayment of
debt. Prepayment penalties are allowed in
some form (but not necessarily imposed) in
many states.
Primary Mortgage Market
The market where the origination or
creation of new mortgages is carried out
by the mortgage lenders such as savings
and loan associations, commercial banks,
and mortgage companies. These lenders
sometimes sell their mortgages into the
secondary mortgage markets such as to
Fannie Mae or Freddie Mac.
Principal
The amount of debt, excluding interest, left
on a loan.
Private Mortgage Insurance
In the event that the borrower does not have
personal funds for a 20% down payment,
lenders will allow a smaller down payment
- as low as 5% in some cases. With the
smaller down payment loans however,
borrowers are usually required to carry
private mortgage insurance. Private
mortgage insurance will usually require an
initial premium payment and may require
an additional monthly fee depending on the
loan’s structure.
Qualifying Ratios
Comparisons of a borrower’s debt and gross
monthly income.
Quitclaim Deed
A deed releasing whatever interest a person
may hold on a property but making no
warranty whatsoever.
REALTOR®
A real estate broker or an associate
holding active membership in a local real
estate board affiliated with the National
Association of REALTORS®.
Rescission
The cancellation of a contract. With
respect to mortgage refinancing, the law
that gives the homeowner three days to
cancel a contract, in some cases, once it is
signed if the transaction uses equity in the
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home as security. (Also known as “Right of
Rescission”).
Re-conveyance/Satisfaction
A fee charged by the lender to execute the
Deed of Re-conveyance, or Satisfaction,
when an existing note is paid off.
Recording Fees
Money paid to the lender for recording a
home sale with the local authorities, thereby
making it part of the public record.
Refinance
Obtaining a new mortgage loan on a
property already owned. Often used to
replace the existing loan(s) on a property,
usually for a lower interest rate.
RESPA
Real Estate Settlement Procedures
Act. RESPA is a federal law that allows
consumers to review information about
known or estimated settlement costs once
after application and once prior to or at
settlement. The law requires lenders to
furnish the information after application
only.
Reverse Annuity Mortgage
(RAM)
A form of mortgage in which the lender
makes periodic payments to the borrower
using the borrower’s equity in the home as
Satisfaction of Mortgage. The document
issued by the mortgagee loan is paid in full.
Also called a “release of mortgage.”
Right of First Refusal
A prior agreement that grants a certain
prospective buyer the first right to purchase
a home, given certain conditions.
Second Mortgage
A mortgage made subsequent to another
mortgage and subordinate to the first one.
Secondary Mortgage Market
The market where mortgage loans can be
resold by lenders, thus providing liquidity
to the mortgage market.
Security Interest
An interest that a lender takes in the
borrower’s property to assure repayment of
a debt.
Servicing
All the steps and operations a lender
performs to keep a loan in good standing,
such as collection of payments, payment of
taxes, insurance, property inspections, etc.
Settlement/Settlement Costs
See Closing/Closing Costs.
Shared Appreciation
Mortgage (SAM)
A mortgage in which a borrower receives
a below market interest rate in return for
which the lender (or another investor
such as a family member or other partner)
receives a portion of the future appreciation
in the value of the property. May also apply
to a mortgage where the borrowers share
the monthly principal and interest payments
with another party in exchange for part of
the appreciation.
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Simple Interest
Interest which is computed only on the
principal balance.
Survey
A measurement of land, prepared by a
registered land surveyor, showing the
location of the land with reference to known
points, its dimensions, and the location and
dimensions of any buildings.
Sweat Equity
Equity created by a purchaser personally
performing work/improvements on a
property they are purchasing.
Title
The written evidence that proves the right of
ownership of a specific piece of property.
Title Insurance
A policy, usually issued by a title insurance
company, used as a protection for lenders or
home owners against financial loss resulting
from legal defects in the title. The cost of
the policy is often borne by the purchaser
and/or the seller.
Title Search
An examination of municipal records to
determine the legal ownership of property,
usually performed by the title company.
Truth in Lending
Also known as Regulation Z of the Truth
in Lending section of the Consumer Credit
Protection Act. It regulates the disclosure of
consumer credit costs and also garnishment
procedures, and prohibits exorbitant
credit transactions. Its purpose is to make
consumers aware of the cost of credit and
to enable them to compare the costs of
alternate forms of credit.
Two-Step Mortgage
A mortgage in which the borrower receives
a below market interest rate for a specified
number of years (most often 7 or 10), and
then receives a new interest rate adjusted
(within certain limits) to market conditions
at that time. The lender sometimes has
the option to call the loan due with 30
days notice at the end of 7 or 10 years.
Also called a “Super Seven” or “Premier”
mortgage.
Underwriting
The decision whether to make a loan to
a potential home buyer based on credit,
employment, assets, and other factors and
the matching of this risk to an appropriate
rate and term or loan amount.
Usury
Interest charged in excess of the legal rate
established by law.
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VA Loan
A mortgage where a portion of an eligible
veteran’s loan is guaranteed in terms of
repayment to the lender by the Department
of Veterans Affairs. Restricted to individuals
qualified by military service or other
entitlements.
VA Mortgage Funding Fee
A premium depending on the size of the
down payment, paid on a VA backed
loan. either paid at closing or added to the
amount financed.
Variable Rate Mortgage
(VRM)
See Adjustable Rate Mortgage.
Verification of Deposit (VOD)
A document signed by the borrower’s
financial institution verifying the status and
balance of his/her financial amounts.
Verification of Employment
(VOE)
A document signed by the borrower’s
employer verifying his/her position and
salary
Warehouse Fee
Many mortgage firms must borrow funds on
a short term basis in order to originate loans
which are to be sold later in the secondary
mortgage market (or to investors). When
the prime rate of interest is higher on short
term loans than on mortgage loans, the
mortgage firm has an economic loss which
is offset by changing a warehouse fee.
Wraparound Mortgage
Results when an existing assumable loan is
combined with a new loan, resulting in an
interest rate somewhere between the old
rate and the current market rate.
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Goal Setting / Business Planning
Harvard Goal Study
This study was completed using Harvard alumni ten
years after they graduated from that institution.
• 84% had no specific goals, just “growing
generalities”
• 13% had specific goals, but not in writing
• 3% had very specific and written goals
The 13% with specific goals earned on the average 2x
more than those with no specific goals.
The 3% with specific goals earned on the average 10X more than those with no specific goals.
SMART Goal Worksheet
Specific
Measurable
Attainable
Results Orientated and
Relevant
Time-bound
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FINANCING, GOAL SETTING / BUSINESS PLANNING, TELL 21BUSINESS PLANNING
“Anyone can figure out why not to do something. It’s too cold, I’m too busy,
I’m tired, or it will just take too long to complete. All of us want spectacular
results; the problem is that getting spectacular results requires effort. We see
other people doing what we wish we could do and then we fall back into
either criticizing them for their success or being envious of how lucky they
are. If we listen carefully to their stories, we will see that they are probably no
better off than we were. All they did was follow the step-by-step process that
helped them arrive at the destination they desired.”
Stefan J. M. Swanepoel
RealSure.com
Do not confuse business planning with goal
setting. Anyone in real estate can set goals,
but professional owners, brokers, managers
and agents build real plans. Business
planning is the road map that calculates how
many transactions you must close, what your
total overhead cost per transaction is, and how
many activities you must complete to meet
your income goal.
Most real estate professionals recognize that
working in real estate brokerage is a business,
not a hobby. But few apply basic business
principles to their real estate business. Even
agents and brokers who value setting goals
and defining specific objectives for their
business often lack the time and expertise to
develop a comprehensive budget and business
plan.
In summary, real estate business plans outline
and evaluate all aspects of your real estate
business venture. They provide you with a
specific road map and process about how to
achieve your goals. A good business plan
starts with your “wish list” (i.e. how much you
wish to earn), and then guides you through
the process of examining the key aspects of
generating positive income. Your business
plan should include the following key
elements:
FOCUS
CLARITY
DIRECTION
ACCOUNTABILITY
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Mail/Call/See / SOI
• List of all names and numbers
• Attach this to your Outlook
• Each SOI assigned a number
• Decide how many each day
• Use Tracking form
Schedule
• Schedule time to track down numbers
• Schedule time prior to calling expireds
for overall market research. (MRIS)
• Schedule time to write Thank You notes
• Schedule time to stop by with more
information
Value Packages
• Letter of Introduction
• Resume, references, office location
• Relocation “Friends and Family” flyer
• MRIS statistics
• Buyer chart / Seller chart
• Rent vs. Buy Analysis
• What your agent should do
• Sample sales contract
• What to look out for
RECAP:
• Create an action list for each event
• How long does each task take?
• What is the lead time needed for each
task?
• What materials/ supplies do I need for
each task?
• Re-engineer if necessary
• Start with the end in mind, and then
work backwards, does the date work?
BUSINESS PLANNING
82. 35FIRE - NEW AGENT TRAINING MANUAL - TAB - 3
FINANCING, GOAL SETTING / BUSINESS PLANNING, TELL 21
Financial Planning Worksheet
Monthly Totals
Personal Expenses (housing, food, vehicle, clothing,
utilities, entertainment, dining, household, credit cards,
gifts, etc.)
$ 3050
Business Expenses (dues, MRIS fees, fuel, vehicle
maintenance, E&O insurance, advertising, mailings,
supplies, training, conventions, telephone)
+ $ 1250
Savings Goal (retirement, college tuition, vehicle, pay
off credit cards, travel, fun, hobbies)
+ $ 1000
Subtotal = $ 5300
Taxes Divide by .75 = /75
Total Monthly Income Needed = $7066
Deduct other income (if any) - $ 0
Total Monthly Net Income Needed $ 7066
x 12 Annual Income 85,000
What does retirement look like for me?
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
83. 36 FIRE - NEW AGENT TRAINING MANUAL - TAB - 3
FINANCING, GOAL SETTING / BUSINESS PLANNING, TELL 21
Financial Planning Worksheet
Monthly Totals
Personal Expenses (housing, food, vehicle, clothing,
utilities, entertainment, dining, household, credit cards,
gifts, etc.)
Business Expenses (dues, MRIS fees, fuel, vehicle
maintenance, E&O insurance, advertising, mailings,
supplies, training, conventions, telephone)
+
Savings Goal (retirement, college tuition, vehicle, pay
off credit cards, travel, fun, hobbies)
+
Subtotal =
Taxes Divide by .75 =
Total Monthly Income Needed =
Deduct other income (if any) -
Total Monthly Net Income Needed
x 12 Annual Income
What does retirement look like for me?
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
84. 37FIRE - NEW AGENT TRAINING MANUAL - TAB - 3
FINANCING, GOAL SETTING / BUSINESS PLANNING, TELL 21
The Prospecting Success Formula
SAMPLE CALCULATION
Average sales price for your market $ 400,000
Multiplied by the average brokerage rate received by
your company in co-brokerage transactions (i.e. 0284%)
x .0284
Equals the average brokerage fee = $11,360
Multiplied by your personal commission split (i.e. 50%) x .50
Equals your average commission income per transaction = $5,680
Your Annual Income Expectation $85,000
Divided by your average commission income per
transaction
÷ $5,680
Equals the number of transactions that you need in the
year (round up to the next higher number)
15
Multiplied by 300 x 300
Equals the number of contacts that you need in the year = 4,500
Divided by the number of working weeks in the year ÷ 47
Equals the number of weekly contacts that you need to
make (round up to the next higher number)
= 96
Divided by 5 days per week ÷ 5
Equals the number of daily contacts that you need to
make (round up to the next higher number)
= 20
The total transactions needed in the year 15
Multiplied by 2 x 2
Equals the number of listing/buyer agreements needed = 30
Multiplied by 3 x 3
Equals the number of appointments needed = 90
Divided by the number of working weeks in the year ÷ 47
Equals the number of appointments needed per week
(round up to the next higher number) = 2
85. 38 FIRE - NEW AGENT TRAINING MANUAL - TAB - 3
FINANCING, GOAL SETTING / BUSINESS PLANNING, TELL 21
The Prospecting Success Formula
Average sales price for your market $ _______
Multiplied by the average brokerage rate received by
your company in co-brokerage transactions (i.e. 0284%)
x _______%
Equals the average brokerage fee = $______
Multiplied by your personal commission split (i.e. 50%) x ______%
Equals your average commission income per transaction = $______
Your Annual Income Expectation $______
Divided by your average commission income per
transaction
÷ $______
Equals the number of transactions that you need in the
year (round up to the next higher number)
_______
Multiplied by 300 x 300
Equals the number of contacts that you need in the year = _______
Divided by the number of working weeks in the year ÷ 47
Equals the number of weekly contacts that you need to
make (round up to the next higher number)
= _______
Divided by 5 days per week ÷ 5
Equals the number of daily contacts that you need to
make (round up to the next higher number)
= _______
The total transactions needed in the year _______
Multiplied by 2 x 2
Equals the number of listing/buyer agreements needed = _______
Multiplied by 3 x 3
Equals the number of appointments needed = _______
Divided by the number of working weeks in the year ÷ 47
Equals the number of appointments needed per week
(round up to the next higher number)
= _______
86. 39FIRE - NEW AGENT TRAINING MANUAL - TAB - 3
FINANCING, GOAL SETTING / BUSINESS PLANNING, TELL 21
What is your expected sales price and the amount of money you make per transaction?
What is the number of contacts per day? Break it all down.
The Numbers
Average sales price _____ $ per transaction _______
Transaction _____ Annual income _______
1st
quarter 17.2% _____ ________+/-
2nd
quarter 29.4% _____ _______-+/-
3rd
quarter 30.1% _____ ________+/-
4th
quarter 23.9% _____ _______+/-
TOTAL Daily Contacts _______________________________________
SOI Expires Upcoming events
SOI growth: __________ Business cards Other
*Thank you notes _____
* Thank you notes are not part of daily contacts
87. 40 FIRE - NEW AGENT TRAINING MANUAL - TAB - 3
FINANCING, GOAL SETTING / BUSINESS PLANNING, TELL 21
What is your expected sales price and the amount of money you make per transaction?
What is the number of contacts per day? Break it all down.
The Numbers
Average sales price $400,000 $ per transaction 5680
Transaction 15 Annual income 85,000
1st
quarter 17.2% 3 14,600 +/-
2nd
quarter 29.4% 4 25,000 -+/-
3rd
quarter 30.1% 5 25,600 +/-
4th
quarter 23.9% 4 29,400 +/-
TOTAL Daily Contacts 20
SOI 5 Expires 5 Upcoming events 10
SOI growth: 5 Business cards Other
*Thank you notes _____
* Thank you notes are not part of daily contacts
88. 41FIRE - NEW AGENT TRAINING MANUAL - TAB - 3
FINANCING, GOAL SETTING / BUSINESS PLANNING, TELL 21
DAILY PLAN
89. 42 FIRE - NEW AGENT TRAINING MANUAL - TAB - 3
FINANCING, GOAL SETTING / BUSINESS PLANNING, TELL 21
A recent Natonal Association of REALTORS®’s study suggests that to be successful today, a
real estate professional must:
1. Develop a close personal relationship with both buyer and seller prospects, not just the
agent’s past clients.
2. Build a saleable “Book of Business.”
3. Possess “world class selling skills.”
1. Prospects
A. Develop multiple referral sources
B. Concentrate on Listings
Prospect Sources
Prospecting requires time, money, and energy. Concentrate on those prospects that require the
least of all three.
2. Build a saleable book of business that has value. Set up a database that enables you to mail
something to your SOI/BOB each month, call three times a year, and visit your customers and
clients at least once each year.
3. Schedule your week one week in advance to create balance in your life.
4. Develop top selling skills that allow you to control situations.
“Customer satisfaction is worthless. Customer loyalty is priceless.” Jeffrey Gitomer
d h
sources Platinum
Book of Business
Book of Business
FSBO
Expired Listings
Open House
Just Listed/Just Sold
Opportunity Time
Farming (geographic)
RELATIONAL
90. 43FIRE - NEW AGENT TRAINING MANUAL - TAB - 3
FINANCING, GOAL SETTING / BUSINESS PLANNING, TELL 21
Definitions:
1. Contact: Someone with whom you have
had a conversation about real estate. This can
be by phone or in person.
2. Lead: Someone who has a possible real
estate need.
3. Referred lead: Someone who has a
possible real estate need, and has been
referred to you. For example, your friend Joe
tells you that Mark, the manager of the local
grocery store, may be moving.
4. Prospect: Someone with a definite real
estate need, an admitted need. An example
would be a FSBO.
5. Referred prospect: Someone who has a
definite real estate need, and has been referred
to you. For example, you visit the grocery
store and introduce yourself to Mark, who
confirms that he is indeed moving prior to the
end of the year.
6. Validated referred prospect: This occurs
when Joe contacts Mark and advises Mark that
you are the best person to help him with his
real estate needs. Joe actually refers Mark to
you. He validates your expertise. Joe actually
contacts Mark and advises Mark that you will
be contacting him.
7. Book of Business (BOB/SOI): A
list of 250 people with whom you have
relationships.
8. Platinum Book of Business: A list of the
top people in your BOB/SOI. These people
are the source of multiple referrals. These are
people who know people, and have told you
that they would refer people to you. They
have also said that it is OK for you to stay in
touch with them. Your job is to find five new
Platinum BOB/SOI’s each week!
9. Client: Someone with whom you already
have a real estate agency relationship.
