1.0 Chapter 1: Learning Objectives & Key Terms Flashcards
Absentee Owner
An individual or corporation that owns a particular property without actually occupying it.
Appraisal
An estimate of the value of property resulting from an analysis of facts about the property. An opinion of value.
Appraiser
One qualified by education, training and experience who is hired to estimate the value of real and personal property based on experience, judgment, facts, and use of formal appraisal process.
Broker Price Opinion (BPO)
A broker’s or licensed real estate professional’s opinion of the value of a property.
Business Opportunity
A business investment that allows the buyer to begin a business. It may include real estate along with the business or just the business within a leased space.
Comparative Market Analysis (CMA)
An analysis of the competition in the marketplace that a property will face upon sale attempts.
Dedication
Commitment to a task or purpose.
Farm Area (Target Market)
The area in which a real estate professional concentrates their efforts.
Follow-up
Appropriate action taken as a result of information gained.
Property Management
A branch of the real estate business involving the marketing, operation, maintenance and day-to-day financing of rental properties
Real Estate Brokerage
An organization with at least one Real Estate Broker acting as the agent for others in negotiating the sale or rental of real property for a fee.
Special Purpose Property
A property designed for a special purpose such as a church, school or hospital.
Subdivision Plat Map -
A plan of a tract of land subdivided into lots and showing required or planned amenities.
Uniform Standards of Professional Appraisal Practice (USPAP)
Establishes the requirements for professional appraisal practice.
Multiple Listing Service - MLS
An organization of brokers who have agreed to cooperate with member brokers in marketing listings.
1.1. Introduction to the Real Estate Business
When you purchase a piece of real estate, you become an owner of real property. Just like when you
go to a store to purchase a sofa, you become an owner of personal property.
The rights you receive as an owner of real property include: the right to occupy the property, the
right to control the uses of the property, the right to enjoy the property without interference, the
right to exclude others from the property, and the right to transfer ownership of the property.
Your job as a real estate agent:
As a licensed agent, it is your responsibility to facilitate real estate transactions and to protect and
educate your clients about their rights as owners or leasees of real property.
How does real estate help the economy?
The real estate market has this kind of impact on the financial system as a whole. If the economy is
healthy and people are making money, property values tend to be high and feed the system. But if
times are tough and people don’t have the money to purchase homes, the real estate values decrease.
When real estate values decrease, banks make less money because they have to lower mortgage
rates. When the banking system is losing money, fewer loans can be issued to new businesses or to
established businesses looking to expand and the growth of the whole economic system stagnates.
What business are dependent on real estate?
Many industries are largely dependent on real estate activity. Mortgage lenders, construction
companies, and property management companies are all examples of vital businesses that rely
on the housing market. Not to mention the litany of professionals like appraisers, lawyers, and
accountants who actively participate in the real estate business and earn considerable income from
real estate transactions.
Why is real estate an investment tool?
Plus, real estate is an investment tool that is leveraged by financially savvy people from all walks
of life. It can create passive cash flow, provide collateral for loans, and has certain tax advantages
that appeal to industrious people.
If real estate collapses, everything else does as well.
For all these reasons, the real estate industry forms the spine of our financial system. If it is strong
and healthy, it facilitates further economic growth. But if it collapses, every other industry will also
face dire consequences.
It is not our job to market properties:
As a real estate agent, you are not simply marketing properties. Landlords market properties; real
estate agents market their knowledge and expertise. In order to succeed in this business, you must
be an expert in the different facets of the industry.
You must maintain a high level of knowledge in property transfers:
First, you must maintain a high level of knowledge in the area of property transfers. If buying a
home was as simple as buying a pack of gum, there would be no need for real estate agents. The
concept of selling a home is simple, but the paperwork and all the minutia that goes into transferring
the ownership of real property can get very complicated. Therefore, you must become an expert
on this process to ensure that the transaction is smooth and legal. Transferring ownership is more
complicated than simply selling a product. Understanding the difference and assisting your clients
through that process will be an important part of your business.
How is real estate valued?
The value of a piece of real estate is determined by supply and demand like anything
else. Market conditions play a big role in determining both of these factors.
So, in order to be a great real estate agent, it’s vital to understand how these conditions play a role
in the overall dynamics of your local market. You should memorize property values in individual
neighborhoods, learn the local geography, identify the local attractions, and pay attention to the
seasonal changes that may affect your business. Any detail that you can internalize will help you
get a better understanding of the market you’re in and better serve your clients as a result.
