FREC II - BROKER PRE-LICENSING COURSE
CLASS SYLLABUS

Course Title: FREC II Pre-License Broker Course
Text Book Title: Florida Real Estate Broker's Guide (Dearborn Real Estate Education)
Course Hours: 72 Total (69 classroom and 3 class exam)

Part I Getting Started in the Real Estate Business

Chapter 1 Becoming A Licensed Real Estate Broker 3 class hrs.

Learning Objectives:

This chapter begins with an explanation of who must be licensed and the qualifications necessary for obtaining a Florida Brokers License. The prelicense education requirement and the various ways the experience requirement can be satisfied are detailed. Postlicensing and continuing education requirements also are presented, as are exemptions from the educational requirements. Finally, the chapter discusses how to obtain a brokers license through mutual recognition and contrasts real estate licensure and registration. It also covers license registration in detail.

Once completing this chapter, a student should be able to:

a. Explain the postlicensing and continuing registration requirements for brokers.
b. List exceptions to the broker prelicense course requirements.
c. Explain the three ways a broker applicant can satisfy the experience requirement.
d. Discuss the requirements of obtaining a brokers license through mutual recognition.
e. Distinguish between voluntarily and involuntarily inactive statuses.
f. Distinguish between licensure and registration.
g. Distinguish between group license and multiple licenses.
h. Understand the rules regarding change of address and residency.
i. Identify practices exempt from licensure.

Chapter 2 Opening A Real Estate Office 3 class hrs.

Learning Objectives:

This chapter describes the various types of business entities that may engage in real estate brokerage activities in Florida. Other issues that affect the creation of a real estate office such as the statutory requirements for the principle offices and branch offices and the registration of officers, directors and sales associates, are also explained. Administrative rules governing signs, advertising, record keeping and conduct are discussed as well. The chapter concludes with an explanation of important state and federal laws regulating accessibility to commercial facilities, nondiscriminatory advertising and telemarketing.

Once completing this chapter, a student should be able to:

a. Differentiate among the various types of businesses that may be registered as brokerage entities.
b. Explain the requirements associated with registering a trade name with the DRE.
c. Explain the requirements for fictitious name registration.
d. Identify the requirements for a broker's office(s).
e. Explain what determines whether a temporary shelter must be registered as a branch office.
f. List the requirement related to signs.
g. Describe the accessibility requirements outlined in the American's with Disabilities Act as it applies to real estate offices.
h. List the license law requirements related to advertising by real estate brokers.
i. Describe the requirements for rental lists.
j. Describe the Fair Housing Act requirements for advertising real estate.
k. List the Federal Communications Commission's do not call rules.
l. Describe the applicable exemptions under Florida's telephone solicitation law.

Chapter 3 Owning, Managing and Supervising a Real Estate Office 4 class hrs.

Learning Objectives:

This chapter discusses the investment of time and capital it takes to open a real estate brokerage. Development of a business plan, tax considerations, accounting systems and employees verses independent contractors. Policy and procedure manuals as well as sales associate compensation is also discussed.

Once completing this chapter, a student should be able to:

a. List at least six categories of costs required when establishing a brokerage office.
b. List the three factors a broker must consider when estimating income for the new firm.
c. List the five factors a broker must consider when estimating expenses for the firm.
d. Describe four advantages in purchasing a real estate franchise.
e. Describe four advantages in remaining an independent broker.
f. Describe the difference between cash basis accounting and accrual basis accounting.
g. List the three major requirements for sales associates to qualify for independent contractor status.
h. Describe the difference in compensation to unlicensed and licensed personal assistants.
i. List six sources for recruiting sales associates.
j. List the categories of potential employees protected under the equal employment opportunity laws.
k. Describe the five major compensation plans for sales associates.
l. List at least six major discussion topics for weekly sales meetings.

Chapter 4 Escrow Management 4 class hrs.

Learning Objectives:

This chapter begins with a discussion of the requirements for establishing and maintaining an escrow (or trust) account. Rules regarding timely deposit of escrow funds and the requirements for maintaining interest-accounts and advanced fee escrow accounts are presented. Also the procedure for completing the monthly reconciliation statement, including how to determine the brokers trust liability and reconciled bank balance is detailed. The chapter concludes with a discussion of the escrow disbursement dispute process and an explanation of how to handle escrow issues on special types of properties.

Once completing this chapter, a student should be able to:

a. Define the term "escrow account".
b. Define the terms commingle and conversion.
c. Describe the requirements for establishing an escrow account(s).
d. Describe the requirements for timely deposits of escrow funds.
e. Describe the procedure for handling postdated checks.
f. Describe the requirements for handling an interest bearing escrow account.
g. Describe the procedure for disbursing funds from an interest bearing escrow account.
h. Describe the requirements for handling advance fees.
i. Describe the requirements for maintaining escrow records.
j. Define the term "trust liability".
k. Calculate the brokers trust liability.
l. Calculate the reconciled bank balance.
m. Prepare a monthly reconciliation statement.
n. Distinguish among the four settlement procedures.
o. Recognize exceptions to the FREC's notification and settlement requirements.

Chapter 5 Office Inspections and the Disciplinary Process 4 class hrs.

Learning Objectives:

This chapter begins with how to prepare for an office inspection and an audit of the brokers escrow (trust) account. The chapter also details the disciplinary process and concludes with an explanation of the Real Estate Recovery Fund.

Once completing this chapter, a student should be able to:

a. Describe the office inspection process.
b. Describe the information and records that must be made available to the inspector during a routine office inspection and escrow account audit.
c. Explain the procedure involved in the reporting of violations, the investigation of complaints and the conduct of hearings.
d. Describe the elements of a valid complaint.
e. Describe the composition of the probable cause panel.
f. Recognize actions that would cause a license to be subject to suspension or revocation.
g. Identify individuals who would be eligible to seek reimbursement from the Real Estate Recovery Fund.
h. Describe the limits imposed by law on the Real Estate Recovery Fund.

Part II Valuing Real Property

Chapter 6 Overview Of Real Estate Valuation 4 class hrs.

Learning Objectives:

This chapter explains state certification and licensure of appraisers and introduces the Uniform Standards Of Professional Appraisal Practice. The various types of value are discussed, and basic appraisal principles are described. This chapter does not focus on how to "conduct" an appraisal - rather on how to analyze an appraisal report. The chapter concludes with a discussion of the steps involved in the appraisal process.

Once completing this chapter, a student should be able to:

a. Define a federally related transaction.
b. Distinguish among value, price and cost.
c. Distinguish among the different types of value.
d. Distinguish among the various appraisal principles.
e. Distinguish between highest and best use as though vacant and highest and best use as improved.
f. Describe the steps involved in the appraisal process.
g. Distinguish among the different types of appraisal reports.

Chapter 7 Sales Comparison, Cost Depreciation and Income Approach 5 class hrs.

Learning Objectives:

This chapter explains the procedures used in the three approaches to value and their underlying theories. The sales comparison approach, cost depreciation approach and the income capitalization approach are discussed in detail.

Once completing this chapter, a student should be able to:

a. Describe the assumptions underlying the sales comparison approach.
b. Calculate the various adjustments necessary under the sales comparison approach.
c. Distinguish between fixtures and trade fixtures.
d. Conduct a sales comparison adjustment grid using the proper sequence of adjustments.
e. Distinguish among normal sale price, market conditions - adjusted normal sale price and final adjusted sale price.
f. List the steps in the cost depreciation approach.
g. Distinguish between reproduction cost and replacement cost.
h. Describe the three methods for estimating cost.
i. Distinguish among the types of accrued depreciation.
j. Calculate an accrued depreciation adjustment using the lump-sum age-life method.
k. Define effective age and economic life.
l. Perform a GIM analysis.
m. Distinguish among potential gross income, projected gross income and net operating income.
n. Distinguish among the three types of operating expenses.
o. Develop a reconstructed operating statement.
p. Calculate a market derived capitalization rate.
q. Calculate value using the income approach formula.

Chapter 8 Comparative Market Analysis 3 class hrs.

Learning Objectives:

This chapter begins with a discussion of the differences and similarities between a formal appraisal and a comparative market analysis (CMA). This chapter shows the common elements of comparison and discusses how to adjust for differences. This chapter finishes with a case study covering CMA preparation.

Once completing this chapter, a student should be able to:

a. Describe at least five differences between a formal appraisal and a CMA.
b. Explain the three major sections of a typical CMA report form.
c. Remember the information necessary to prepare a CMA.
d. Suggest the best sources of information necessary to prepare a CMA.
e. Discuss the major elements of comparison between the comparable property and the subject property.
f. Correctly calculate the square footage of a building.
g. Prepare a CMA which would allow a buyer or seller to understand values in the neighborhood.

Chapter 9 Basic Business Appraisal 4 class hrs.

Learning Objectives:

This chapter begins with a discussion of the different types of legal entities that a business practitioner may encounter. Ratio analysis is described, as are indications that adjustments may be required. Adjusted financial statements are discussed, along with examples. The chapter also describes how an appraiser applies the approaches to value to the business.

Once completing this chapter, a student should be able to:

a. Describe the characteristics of the legal entities a business appraiser may encounter.
b. List at least five reasons for a business appraisal.
c. List the five steps in the business appraisal process.
d. Describe at least three specific problem areas in a financial statement that may distort the firm's true economic value.
e. Explain the differences between cash basis accounting and accrual basis accounting.
f. Calculate the important financial ratios.
g. List and describe the four approaches to estimating business value.

Part III Listing And Selling Real Property

Chapter 10 Agency 4 class hrs.

Learning Objectives:

This chapter begins with a historical account of agency practices and regulations in Florida. The various types of agency and nonagency relationships currently practiced in Florida are discussed, and the statutory disclosure documents are detailed.

Once completing this chapter, a student should be able to:

a. Describe which provisions of the Brokerage Relationship Disclosure Act apply only to residential real estate sales.
b. Define real estate sales with regard to disclosure requirements.
c. Describe the required content and format of the various disclosure forms.
d. Describe purpose and requirements of the No Brokerage Relationship Notice.
e. Describe the purpose and requirements of the Notice Of Nonrepresentation.
f. List the duties a licensee owes to a buyer or seller with whom the brokerage firm has a no brokerage relationship.
g. Define "principle" in a single agent relationship.
h. Define the duties single agents owe their principles.
i. Distinguish between transaction broker and dual agency.
j. Describe a transaction broker's duties.
k. Describe the process of transition from a single agent to transaction broker.
l. Identify actions that will terminate an agency relationship.
m. List the disciplinary actions that FREC may take when a licensee violates any of the provisions of the Florida Statutes with regard to agency regulation.

Chapter 11 Contracts 5 class hrs.

Learning Objectives:

This chapter describes how to gather the required information for contracts. Other issues related to selling real property are also covered, including escrow deposits, as is the licensee's duty to disclose facts that may affect a property's value.

Once completing this chapter, a student should be able to:

a. Describe the characteristics of the three major types of listings.
b. Describe at least three statutory requirements for listing agreements.
c. Distinguish between a listing broker's employment to 'find a purchaser" and to "effect a sale".
d. List the four types of contracts a licensee may prepare.
e. List the four documents a licensee can use to gather information for preparing a contract.
f. Describe the difference between a tenancy by the entireties, joint tenancy and a tenancy in common.
g. Specify what steps are desirable to protect the parties if the buyer takes occupancy either before or after the closing date.
h. Describe the difference between an option contract and a right of first refusal.
i. Describe the effects of the Johnson V. Davis Supreme Court ruling on real estate practice in Florida.
j. Define the differences between a lease option agreement and a lease purchase agreement.

Chapter 12 Financing Real Estate 5 class hrs.

Learning Objectives:

This chapter describes the instruments used in a mortgage loan and the rights of lenders and borrowers. Different types of mortgage loans available for residential buyers and alternative financing is discussed.

Once completing this chapter, a student should be able to:

a. Describe the difference between a note and a mortgage.
b. Explain the benefits of having the first recorded lien on a property.
c. Describe Florida's statutory foreclosure process.
d. Calculate the mortgage payments on a new loan using financial tables or a financial calculator.
e. Calculate the down payment for calculating an FHA loan.
f. Describe the differences between a term loan, a partially amortized loan and a fully amortized loan.
g. Explain how to calculate the interest rate on an adjustable rate mortgage.
h. Describe the major characteristics of the FHA's reverse annuity mortgage.
i. List four required consumer disclosures under Florida's Timesharing Act.
j. List three possible scenarios that could cause loss for a consumer buying property with a contract for deed.
k. Describe at least three possible benefits to the seller on a sale-leaseback transaction.
l. List the protected classes of consumers under the Equal Credit Opportunity Act.
m. Explain why the APR disclosure for a 30 year loan may understate the real yield.
n. List at least five requirements of RESPA.
o. List at least ten items the borrower should bring to the loan application appointment.
p. Calculate the minimum qualifying ratios for conventional and FHA mortgages.
q. Estimate the approximate yield to the lender when the lender charges discount points.
r. Describe the characteristics and advantages of automated underwriting systems.

Chapter 13 Closing Real Estate Transactions 3 class hrs.

Learning Objectives:

This chapter describes the HUD-1 statement and helps you prepare one. A traditional composite closing statement is also discussed.

Once completing this chapter, a student should be able to:

a. Describe the many tasks the broker must complete that lead to a successful closing.
b. Explain the major objectives of a preclosing inspection.
c. List the three disclosures that a lender should make at the time of loan application.
d. Describe the major sections of the HUD-1 settlement statement.
e. Describe the process used in prorating taxes, interests and prepaid rents.
f. Prepare a HUD-1 settlement statement.
g. Prepare a composite closing statement.

Chapter 14 Federal Income tax Laws Affecting Real Estate 4 class hrs.

Learning Objectives:

This chapter begins by covering the deductibility of homeowner expenses such as taxes and interest. We discuss the new rules permitting the use of IRA accounts for home investment, as well as the tax deductions for vacation homes and home offices. Also discussed are the new rules an capital gain taxes on the sale of a personal home. This chapter also deals with taxes on investment property, as well as installment sales and tax deferred exchanges.

Once completing this chapter, a student should be able to:

a. List the two principle tax deductions available to homeowners.
b. List the two types of home loans that qualify for a homeowner's interest deductions.
c. Itemize the five requirements for deducting buyer-paid points.
d. Explain how to use an IRA to contribute to the down payment and acquisition costs of a new home.
e. List the requirements for excluding tax on the gain of the sale of a principle home sold after May 6th 1997.
f. Itemize the steps required to calculate taxable income from an investment property's operations.
g. Describe the process used to allocate a property's acquisition costs between land and the improvements.
h. Calculate the annual depreciation for both residential income properties and nonresidential income properties.
i. List two methods for deferring taxes on the disposition of investment property.

Part IV Specialties

Chapter 15 Investment Real Estate 5 class hrs.

Learning Objectives:

This chapter describes some of the steps investment brokers use to evaluate income property.

Once completing this chapter, a student should be able to:

a. List the characteristics that affect an investment site's value.
b. List at least eight structural components of an income property building and the types of problems a broker might observe.
c. Distinguish between the terms "gross leasable area" and "net leasable area".
d. Describe the difference between a percentage lease and a net lease.
e. Calculate the additional rent required from financing a tenant improvement.
f. Describe the difference between simple interest and add-on interest.
g. Itemize three methods an investor can use to reduce the annual debt service on a mortgage.
h. Describe the priorities of lease compared with mortgages on the same property.
i. List at least six problem areas that a broker must scrutinize when reviewing an owner's operating statement.
j. Construct an annual operating statement for an income property.
k. Calculate the appropriate financial and investment ratios used to evaluate a one year statement.
l. Describe the process used to estimate the after tax equity reversion.
m. Calculate the present value of a series of unequal cash flows.
n. Calculate an investment's net present value.
o. Describe the differences between net present value and internal rate of return.
p. List at least six types of risk.
q. List at least six categories of information that a broker should understand about an investor.

Chapter 16 Zoning and Planning, Subdividing Land and Special Issues. 3 class hrs.

Learning Objectives:

This chapter begins with an overview of the evolution of zoning and planning laws in Florida. Nonconforming uses, special exceptions and variances are explained. Other zoning related matters are discussed, including flood zones, planned unit developments and subdivision regulations. The provisions of the Florida Uniform Land Sales Practices Law are presented. This chapter concludes with a brief discussion of the federal Clean Water Act of 1997 and the Coastal Zone Management Act.

Once completing this chapter, a student should be able to:

a. Describe the major provisions of the Growth Management Act.
b. Know when a development of regional impact review is needed.
c. Understand the concurrency provisions purpose.
d. Distinguish among a variance, special exception and nonconforming use.
e. Describe the characteristics of a planned unit development.
f. Distinguish between zoning and subdivision regulations.
g. Explain the use of impact fees and dedication of the land.
h. Explain the basic provisions of the Florida Uniform Land Sales Practices Law.
i. Briefly describe the purpose of the Clean Water Act Of 1997 and the Coastal Zone Management Act.

Chapter 17 Environmental Concerns Affecting Real Estate Transactions 3 class hours

Learning Objectives:

This chapter explores the many aspects of CERCLA, including how to define the term "potentially responsible persons", access to National Priority List and ordering an environmental site assessment. This chapter covers other environmental issues, including radon gas and lead-based paint, and explains requirements regarding disclosures.

Once completing this chapter, a student should be able to:

a. Define "potentially responsible persons".
b. List the criteria for innocent landlord defense.
c. Understand The National Priorities List's purpose and use.
d. Define "environmental due diligence".
e. Describe the information contained in a Phase I environmental assessment.
f. Describe the disclosure requirements for radon gas and lead-based paint.
g. List the types of properties exempted from the lead-based paint requirements.

Chapter 18 Property Management 5 class hrs.

Learning Objectives:

This chapter begins with a discussion of the many opportunities available in property management. Types of income properties as well as the many skills property managers need are also discussed. Regional, neighborhood and property analyses are covered in detail. This chapter includes a section on advertising, showing property, tenant relations, security deposits and rent collection policies. Types of leases, maintenance programs, accounting and communication with owners are covered as well. The final section of this chapter describes the laws of particular significance to property managers.

Once completing this chapter, a student should be able to:

a. Understand the licensing requirements for property managers and list the exemptions from the requirements.
b. Understand the definition of "community association" and the employment situation that require a community association manager's license.
c. List at least six skills required by a community association manager.
d. List the three types of analyses a manager must prepare to understand the market and the property.
e. Explain the important parts of the marketing process.
f. List the major advertising media property managers use.
g. Describe the methods Chapter 475 FS requires to handle security deposits.
h. Understand which lease forms licensees may complete.

Also Included:

100 Question Practice Final Exam
Glossary
Index