Unit 1: Introduction to the Real Estate Business

From the book Modern Real Estate Practice 21st Edition

Broker

A person or company licensed to buy, sell, exchange, or lease real property for others and to change a fee for these services.

Salesperson

Employed by or associated with the broker to perform brokerage activities on behalf of or for the broker.

Other terms for “Salesperson”

Sales associate or associate licensee

Real estate licensee

A person who has satisfied the requirements of a licensing agency, as authorized by state legislation.

Appraisal

The process of developing an opining of a property’s market value, based on established methods and the appraiser’s professional judgement.

Property manager

A person or company hired to maintain and manage property on behalf of the property owner.

Financing

The business of providing funds that make real estate sales transactions possible.

Subdivision

The dividing of a single property into smaller parcels.

Development

The preparation of a site and construction of structures or other improvements.

Home Inspection

A profession that combines a practitioner’s interest in real estate with skills and training in the construction trades.

Special purpose Real Properties

Privately owned properties, such as places of worship, schools, and cemeteries, as well as publicly held properties, such as schools, municipal service buildings, and parks.

Cooperative

Units that share common walls and facilities within a larger building.

Another term for Factory-built housing

Manufactured homes

Protected classes of the Fair Housing Act

Race, color, national origin, religion, sex, familial status, or disability.

Market

Exists when goods can be bought and sold.

Uniqueness

Means no matter how identical they may appear, no two parcels of real estate are ever exactly alike; each occupies its own unique geographic location.

Immobility

Refers to the fact that property cannot be relocated to satisfy demand where supply is low, nor can buyers always relocate to areas with greater supply.

Factors affecting real estate supply

Labor force, construction, and material costs, Government controls and financial policies, and local government factors.

Factors affecting real estate demand

Population, demographics, and employment, and wage levels.

Demographics

The study and description of a population.

What tax benefit does a married couple who file a joint tax return sell a principal residence, up to $500,000 in profit (sales prices - purchase price) have?

Exclusion from capital gains tax.

What tax benefit exclusion does a taxpayer who files singly have?

They are entitled to a $250,000 exclusion.

Who do appraisers “protect”?

The bank.

Public sector

Government owned/maintained.

Private Sector

Not government owned/maintained.

How special properties get appraised

The cost approach.

Farm area

The area where you want to be the go to agent.