RE Chapter 1: Introduction to the Real Estate Business

Brokerage/Broker

acts as a pint of contact between 2 or more people in negotiating the sale or rental of a property, individual, partnership corporation or other business entity performs licensed activities for another for compensation

• licensee employed by sponsoring broker

sponsoring broker

a person who operates a corporation, LLC or LLP that is licensed by the IL Department of Financial and Professional Regulation

• an individual with a managing broker license who operates a a sole proprietor

designated managing broker

a managing broker who the sponsoring broker designates to manage the real estate brokerage fimr and to supervise sponsored brokers

appraisal

the process of estimating a property’s market value based on established methods and the appraisers professional judgement

property management

a person or company is hired to maintain and manage property on behalf of its owner

• basic responsibility of the property manager is to protect the owner’s investment and maximize the owners return on the investment

• do not need a separate license

financing

the business of providing the funds that make real estate transactions possible

subdivision

the splitting of a single property into smaller parcels

development

involves the constructions of improvements on land

home inspection

allows practitioners to combine their interest in real estate with their professional skills and training in their construction trades

• requires a separate license in IL

• all buyers should do a home inspection, once inspection is waived→ you cannot get it back

counseling

involves providing clients with independent advice based on professional judgement

Real Estate Education

1. available for both practitioners and consumers

2. state licensing laws establish the minimum educational requirements for obtaining and keeping a RE license

   1. course for pre-licensing or continuing education purposes can only be offered by licensed schools and licensed instructors

auctioning

uses an open and competitive bidding process to transfer property ownership

• other areas: many other real estate career options are available in a variety of business settings in both the private and public sector

National Association of REALTORS® (NAR) are known as….

realtors

residential

properties where people live

commercial

office buildings, restaurants, or strip malls

industrial

factories, warehouse, power plants

agricultural

farm land

special purpose

hospitals, churches, schools, courthouses, jails

Factors that affect supply

labor force, construction cost, government controls, financial policies

factors that affect demand

population, demographics (where people want to live), employment and wage levels

the real estate market generally adjusts slowly to the forces of supply and demand

uniqueness, immobility, local markets, technology advancements

Q. can licensees give appraisals

no, they can help with buying and selling but cannot help with refinancing and loans

Q. can property managers evict

no, they do not evict

Q. what can clients/home inspectors not do

they cannot give out the lock box combination, will result in loss of license

Q. what can you not do if you are NOT part of the NAR

cannot call yourself a REALTOR ®

Q. what do price and demand have in common

price follows demand

Q. Land- uniqueness

no 2 properties are the same, affects value

Q. Land- immobility

highest amount of depreciation depends on what surrounds it

Q. Land- local market

this market is localized, the prices can be different literally across the street

Q. what happens if a buyer loses a job in the middle of a loan approval

they do not get approved for the loan and will not get a loan [