Agency
What is 'buyer premium' in Illinois auction sales and how does it affect the agent's role?
AA premium price buyers pay for exceptional properties
BAn additional fee (typically 5-10% of the bid price) added to the highest bid to determine the final purchase price in auction sales; agents must understand this when advising buyers✓ Correct
CA government fee collected from buyers in Chicago high-rise purchases
DA lender's premium charged for approving loans above a certain amount
Explanation
A buyer's premium is an additional fee added to the winning bid at auction, typically 5-10% of the bid price, which becomes part of the final purchase price. When Illinois agents advise buyers at auction sales (foreclosure auctions, estate auctions, commercial auction sales), they must ensure buyers understand the buyer's premium so they can accurately assess their total cost.
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Key Terms to Know
Net Operating Income (NOI)
The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
Fiduciary DutyThe highest legal duty an agent owes to a principal — requiring the agent to act in the principal's best interest above all others.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
Math Concepts
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