Ch.1 - Intro to Modern RE Practices Flashcards
1
Q
Real Estate Professionals
A
Individuals in business organizations whose sole objective is performing a real estate related service or function
2
Q
Property managers
A
These are professionals who oversee specific properties on behalf of the owners.
3
Q
What are property managers responsible for?
A
- the condition of the property and financial performance
- Finding tenants for properties
- collecting rent
- rehab space for tenants are constructing you space
- Ordering repairs and maintaining properties
4
Q
Asset managers
What is their role?
A
- Oversee groups of properties or portfolios.
- Their role is to achieve the investment objectives of their clients as opposed to managing day-to-day operations
5
Q
Broker
What services do they provide?
A
- A professional that a buyer or seller selects to perform real estate services for compensation
- services include Locating properties, negotiating the sale of properties, assisting the client through the closing process
6
Q
Agent
A
A sponsored employee/independent contractor of the broker.
The principal hires an agent to perform certain real estate duties.
7
Q
Lenders
A
Professionals who make loans
8
Q
Title company
What do they do?
A
This company completes an “abstract of title.” This is a search of the records in the county where the property is held. They handled the disbursements all monies
9
Q
Appraisers
A
Trained and licensed professionals authorized to perform appraisals of properties for other parties
10
Q
Mortgage brokers
Who do they bring together?
What do they not do?
A
People who earn a fee to bring bars and lenders together. They do not service loans.
11
Q
Professional inspectors
What do they inspect?
A
People who inspect properties and offer an opinion of the properties condition. This inspection includes structural, electrical, and mechanical systems.
12
Q
Surveyors
A
People who are licensed to take formal measurements of the boundaries, dimensions, and elevations of a parcel of real estate.
13
Q
Residential property
What are three examples?
A
Property that people on and use for housing.
-includes apartments, duplexes and single/family homes.
14
Q
Commercial property
A
Generally refers to retail and office properties. However, it may also include industrial real estate (ex. factories)
15
Q
Investment property
A
Any property that owners hold for investment purposes
16
Q
Real estate commission (the group)
A
This commission is in charge of…
- administering and enforcing licensing laws.
- Past regulations that referred further refine or clarify state statues
17
Q
Who is the real estate commission in Texas and what are they responsible for?
A
Texas real estate commission- TREC
- responsible for administering The Real Estate Licensing Act (TRELA)
18
Q
What does TREC and TRELA stand for?
How are they connected?
A
TREC- Texas real estate commission
TRELA- The real estate licensing act
TREC is responsible for administering the TRELA
19
Q
Texas Real Estate Commission (TREC)
A
This commission is charged with administering and enforcing license laws as well as passing regulations that further refined or clarify state statues.
Responsible for the TRELA
20
Q
The Real Estate License Act (TRELA)
A
Establishes a Real Estate Recovery Fund for the protection of the public against harmful actions by licensee
administered by TREC which has the power to create and enforce new rules to help interpret or define the TRELA, but cannot amend the law
21
Q
Texas Real Estate Commission (TREC)
A
This commission is charged with administering and enforcing license laws as well as passing regulations that further refined or clarify state statues.
Responsible for the TRELA
22
Q
The Real Estate License Act (TRELA)
A
Establishes a Real Estate Recovery Fund for the protection of the public against harmful actions by licensee
administered by TREC which has the power to create and enforce new rules to help interpret or define the TRELA, but cannot amend the law
23
Q
Property value
A
The worth of a piece of real estate based on the price that a buyer and seller agree upon.
24
Q
What determines or affects property value?
A
- The market
- Community factors Such as new Highway, power Plant, shopping centers, or you schools in an excellent distract
25
Value
The present worth a future benefits that a person would gain from owning real estate
26
Price
The amount of money or other assets that a buyer has agreed to pay and a seller has agreed to accept to complete the exchange of a good or service.
27
Market equilibrium principle
This principle states that the market demand moves to meet supply, and supply moves to meet demand
28
Unit of residential demand
This is the household.
Residential demand can be further broken down into demand to lease versus buy and demand for single-family homes versus apartments
29
Household
Is an individual or family who would occupy a dwelling unit
30
Unit of commercial (retail and office) and industrial real estate demand
This is the square footage.
Which is further broken down into demand for least space versus purchase space.
In most instances the area demanded refers to the improved area rather than the total lot area.
31
What other term is “area demanded” referenced?
What is it not?
The area demanded refers to the “improved area”
Rather than the “total lot area”
32
Supply
What influences supply?
The property available for sale/lease that is measured accordingly to property classification.
- influenced by costs (labor), availability of financing, investment returns, and government and community regulation and planning
33
What are the property classifications that supply is measured by?
- Dwelling units (residential)
- Square feet (commercial/industrial)
- acres (agricultural)
34
Demand
The property buyers and tenants wish to acquire that is measured in households (residential), square feet (commercial/industrial) and acres (agricultural).
* wish to acquire =
35
What type of property-related functions do real estate professionals perform?
- Creation and improvement involves capital formation, financing, construction contracting, and regulatory approvals
- management and maintenance: involves property and asset managers
- demolition
- investment ownership
- Regulation of usage, taxation, and housing administration
- Transfer
36
What are the types of specializations within real estate?
These specialization are ...
- brokers and agents
- property managers
- title and escrow companies
- Mortgage brokers
- Lenders, bankers, insurance companies, appraisers, attorneys, inspectors, surveyors, counselors, educators
37
What are the three property type specializations?
1. Residential property
2. Commercial property
3. Investment property
* these are all (blank)
38
What are some types of professional organizations?
- Members of the national Association of realtors (NAR) known as Realtors
- Members of the national Association of real estate brokers known as Realtist
39
If you are not part of the National Association of Realtors (NAR) then you are known as what/who?
Sale person is not associated with an NAR are known as real estate licensees or agents
40
Real estate brokerage
Procuring a buyer/tenant or an owner or landlord or vice versa
41
What kind of knowledge and skills are needed in real estate?
Knowledge: Local market, license loss, closing procedures, etc.
Skills: Time management, market analysis, selling, writing, etc.
42
Real estate law
Federal statues, state statues, a body of court decisions (common law), and local agencies circumscribe how people can develop, manage, and transfer real estate
43
Market Terms- Price and value
Price mechanism: Quantified value of an exchange
Value components: Desire, utility, scarcity (availability in relation to demand), purchasing power (The consumers ability to pay for the item)
44
Minimum Price
Cost + profit =
45
The National Association of Realtors (NAR) Code of Ethics
It sets an even higher standard of performance for member brokers and agents that are part of the association
46
What are examples of essential production costs?
Cost of capital, materials and supplies, labor, management, and overhead
47
Market
Transaction arena where suppliers and demanders defined value through the price mechanism
48
Market interaction
- If supply increases relative to demand then price decreases,
- if demand increases relative to supply price increases
49
If supply increases relative to demand, then the price does what?
Price decreases
*when does it decrease?
50
If demand increases relative to supply then the price does what?
Price increases
* when does it increase?
51
Market equilibrium
Price, cost, value are theoretically the same
- also Supply equals demand
52
What causes market imbalances and what does it cause?
Changes in supply or demand because market and balances, resulting in an equilibrium time lag.
- Supply and demand tend toward balance when they are equal
53
Supply (Economic Term)
Goods or services available for sale, lease, or trade
54
Demand (Economic Term)
Goods or services desired for purchase, lease or trade
55
Economic characteristics of real estate
- Governed by supply, demand, price, cost, value components, government influence
- inherit value, unique appeal, and movable supply, illiquid (cannot always be readily sold for cash), Slow response to cycles, decentralized, local market
56
What influences the supply, demand and price interaction in a market?
The dynamics of value and the cost of producing goods and services.
- Market equilibrium is when the market tends to have balance when supply equals demand and price, cost, and value are identical
57
Supply and demand are both influenced by what in each property type..
Residential
Retail
Office
industrial
Residential- Quality of life/neighborhood, amenities, price and convenience
Retail: Trade area, sales, competition, site access, visibility, growth
Office: efficiency, cost of occupancy, functionality
Industrial: Functionality, labor pool availability, regulatory compliance, supplies, distribution channels
58
What three characteristics determines overall demand?
Base employment, total employment, and population
59
Base employment
The number of persons employed in the business that represent the economic foundation of the area
60
Total employment
Include space, secondary, and support industries.
Total employment creates a demand for labor force
61
What happens to the demand and price if employment and population increase?
What happens if they decrease?
The demand and price increase When employment and population increase
But demand and price also decreases when employment and population also decrease
62
What are some supply-demand indicators?
Price, vacancy, and absorption
_____
Vacancy: is existing, unoccupied supply
Absorption: Is the “filling up” of vacancy
63
What is the real estate supply – demand cycle?
- Under supply
- Accelerate construction add supply
- Equilibrium
- Construction adds more supply
- Oversupply
- Construction stops
- equilibrium
- Demand absorb supply
64
What kind of market influences on supply and demand?
- local economic factors
- National economic trends in money supply, inflation
- Government regulation at all levels
65
How many members are part of the TREC and who appoints them?
There’s a total of 9 board members,
- 6 members from real estate industry
- 3 members from the general public
The governor appoints them
66
Who is deemed ineligible to be part of the TREC board?
If a person or their spouse is registered, certified, or licensed by an occupational regulatory agency in the industry
67
How many calendar years is one term for being on the TREC board?
One term = 6 calendar years
68
What must the TREC do?
- Administer chapter 1101 and 1102
- adopt rules and establish standards relating to permissible forms of advertising by license holder acting as a residential rental locator
- Maintain a registry of certificate holders
- Design in adopt a seal
69
What can the TREC do when conducting hearings in investigations?
They are empowered to issue subpoenas.
70
Why is a license fee charged?
In order to obtain a balance in the trust fund of $1.7 million
71
How does a aggrieved party claim for payment from trust account?
Upon court order and aggrieved party may proceed to collect from the licensee.
However if the licensee cannot pay the party may apply to the court for an order.
The order directs the court to pay the balance due from the real estate recovery fund.
72
What is the max amount that can be taken from a trust account in a single transaction regardless of the number of claimants?
Payments from the trust account for claims may not exceed a total of $50,000
73
If there are judgments against a single licensee... What is the max amount of payment that can be taken from the trust account?
May not exceed a total of $100,000
74
What do you need to obtain before you can act or claim to be a real estate broker or sales person in the state of Texas?
You need a proper license from the TREC
*Do to what?
75
What is the broker ultimately responsible for?
- For the companies activities
- Notably the activities of other licensees as well as the businesses trust accounts
- The broker employees other agents to carry out the firms business
*who is responsible for these?
76
Sales person
Is any licensed person who is associated with licensed broker and perform surgery real estate services
77
When do you not need a license?
- When you are a person investing or contracting to purchase real estate and then sell it or offer to sell it then you are not required to have a license to buy or sell real estate property only for the persons own account
- Attorneys – in– fact, attorneys-at-law, An auctioneer, Receivers, trustees in bankruptcy, administrators, executors, or guardians
- A person employed by an owner, Resident managers, federal agency or state government officer/employee, and owner or the owner’s employee, a partnership or LL partnership
78
What are the requirements to become either a broker and sales applicant in Texas?
- be at least 18, I citizen or lawfully admitted alien and a resident of Texas
- Satisfy the commission as to the outcomes honesty, trustworthiness, integrity
- complete the required courses
- provide fingerprints to the department of public safety
- complete a criminal history background check
- Pay appropriate fees
* sometimes the commission can set rules in the type of education that you may need to renew your license
79
What entity within the TREC is responsible for making decisions about license holders?
Education Standards Advisory Committee
80
Education Standards Advisory Committee
| Responsible for? #of members? Term/expirations?
Responsible for making decisions about licensing.
Consist of 12 members appointed by the TREC
Members serve staggered two-year terms
- On December 31 of an even number the terms of for licensee holder members into education members expire
- On December 31 of an odd number the terms of three licensee holder members and two education members expire and the public number expires
81
What can influence the value to the consumer?
production cost influence the value to the consumer
82
The Association of Real Estate License Law Officials (ARELLO)
An international Association of real estate regulatory that promotes consistent policies and standards for license law and enforcement of license laws
83
What type of property-related functions do real estate professionals perform?
- Creation and improvement involves capital formation, financing, construction contracting, and regulatory approvals
- management and maintenance: involves property and asset managers
- demolition
- investment ownership
- Regulation of usage, taxation, and housing administration
- Transfer
84
What are the types of specializations within real estate?
These specialization are ...
- brokers and agents
- property managers
- title and escrow companies
- Mortgage brokers
- Lenders, bankers, insurance companies, appraisers, attorneys, inspectors, surveyors, counselors, educators
85
What type of property-related functions do real estate professionals perform?
- Creation and improvement involves capital formation, financing, construction contracting, and regulatory approvals
- management and maintenance: involves property and asset managers
- demolition
- investment ownership
- Regulation of usage, taxation, and housing administration
- Transfer
86
What are the types of specializations within real estate?
These specialization are ...
- brokers and agents
- property managers
- title and escrow companies
- Mortgage brokers
- Lenders, bankers, insurance companies, appraisers, attorneys, inspectors, surveyors, counselors, educators
87
What are the three property type specializations?
1. Residential property
2. Commercial property
3. Investment property
* these are all (blank)
88
What are some types of professional organizations?
- Members of the national Association of realtors (NAR) known as Realtors
- Members of the national Association of real estate brokers known as Realtist
89
If you are not part of the National Association of Realtors (NAR) then you are known as what/who?
Sale person is not associated with an NAR are known as real estate licensees or agents
90
Real estate brokerage
Procuring a buyer/tenant or an owner or landlord or vice versa
91
What kind of knowledge and skills are needed in real estate?
Knowledge: Local market, license loss, closing procedures, etc.
Skills: Time management, market analysis, selling, writing, etc.
92
Real estate law
Federal statues, state statues, a body of court decisions (common law), and local agencies circumscribe how people can develop, manage, and transfer real estate
93
Market Terms- Price and value
Price mechanism: Quantified value of an exchange
Value components: Desire, utility, scarcity (availability in relation to demand), purchasing power (The consumers ability to pay for the item)
94
Minimum Price
Cost + profit =
95
The National Association of Realtors (NAR) Code of Ethics
It sets an even higher standard of performance for member brokers and agents that are part of the association
96
What are examples of essential production costs?
Cost of capital, materials and supplies, labor, management, and overhead
97
Market
Transaction arena where suppliers and demanders defined value through the price mechanism
98
Market interaction
- If supply increases relative to demand then price decreases,
- if demand increases relative to supply price increases
99
If supply increases relative to demand, then the price does what?
Price decreases
*when does it decrease?
100
If demand increases relative to supply then the price does what?
Price increases
* when does it increase?
101
Market equilibrium
Price, cost, value are theoretically the same
- also Supply equals demand
102
What causes market imbalances and what does it cause?
Changes in supply or demand because market and balances, resulting in an equilibrium time lag.
- Supply and demand tend toward balance when they are equal
103
Supply (Economic Term)
Goods or services available for sale, lease, or trade
104
Demand (Economic Term)
Goods or services desired for purchase, lease or trade
105
Economic characteristics of real estate
- Governed by supply, demand, price, cost, value components, government influence
- inherit value, unique appeal, and movable supply, illiquid (cannot always be readily sold for cash), Slow response to cycles, decentralized, local market
106
What influences the supply, demand and price interaction in a market?
The dynamics of value and the cost of producing goods and services.
- Market equilibrium is when the market tends to have balance when supply equals demand and price, cost, and value are identical
107
Supply and demand are both influenced by what in each property type..
Residential
Retail
Office
industrial
Residential- Quality of life/neighborhood, amenities, price and convenience
Retail: Trade area, sales, competition, site access, visibility, growth
Office: efficiency, cost of occupancy, functionality
Industrial: Functionality, labor pool availability, regulatory compliance, supplies, distribution channels
108
What three characteristics determines overall demand?
Base employment, total employment, and population
109
Base employment
The number of persons employed in the business that represent the economic foundation of the area
110
Total employment
Include space, secondary, and support industries.
Total employment creates a demand for labor force
111
What happens to the demand and price if employment and population increase?
What happens if they decrease?
The demand and price increase When employment and population increase
But demand and price also decreases when employment and population also decrease
112
What are some supply-demand indicators?
Price, vacancy, and absorption
_____
Vacancy: is existing, unoccupied supply
Absorption: Is the “filling up” of vacancy
113
What is the real estate supply – demand cycle?
- Under supply
- Accelerate construction add supply
- Equilibrium
- Construction adds more supply
- Oversupply
- Construction stops
- equilibrium
- Demand absorb supply
114
What kind of market influences on supply and demand?
- local economic factors
- National economic trends in money supply, inflation
- Government regulation at all levels
115
How many members are part of the TREC and who appoints them?
There’s a total of 9 board members,
- 6 members from real estate industry
- 3 members from the general public
The governor appoints them
116
Who is deemed ineligible to be part of the TREC board?
If a person or their spouse is registered, certified, or licensed by an occupational regulatory agency in the industry
117
How many calendar years is one term for being on the TREC board?
One term = 6 calendar years
118
What must the TREC do?
- Administer chapter 1101 and 1102
- adopt rules and establish standards relating to permissible forms of advertising by license holder acting as a residential rental locator
- Maintain a registry of certificate holders
- Design in adopt a seal
119
What can the TREC do when conducting hearings in investigations?
They are empowered to issue subpoenas.
120
Why is a license fee charged?
In order to obtain a balance in the trust fund of $1.7 million
121
How does a aggrieved party claim for payment from trust account?
Upon court order and aggrieved party may proceed to collect from the licensee.
However if the licensee cannot pay the party may apply to the court for an order.
The order directs the court to pay the balance due from the real estate recovery fund.
122
What is the max amount that can be taken from a trust account in a single transaction regardless of the number of claimants?
Payments from the trust account for claims may not exceed a total of $50,000
123
If there are judgments against a single licensee... What is the max amount of payment that can be taken from the trust account?
May not exceed a total of $100,000
124
What do you need to obtain before you can act or claim to be a real estate broker or sales person in the state of Texas?
You need a proper license from the TREC
*Do to what?
125
What is the broker ultimately responsible for?
- For the companies activities
- Notably the activities of other licensees as well as the businesses trust accounts
- The broker employees other agents to carry out the firms business
*who is responsible for these?
126
Sales person
Is any licensed person who is associated with licensed broker and perform surgery real estate services
127
When do you not need a license?
- When you are a person investing or contracting to purchase real estate and then sell it or offer to sell it then you are not required to have a license to buy or sell real estate property only for the persons own account
- Attorneys – in– fact, attorneys-at-law, An auctioneer, Receivers, trustees in bankruptcy, administrators, executors, or guardians
- A person employed by an owner, Resident managers, federal agency or state government officer/employee, and owner or the owner’s employee, a partnership or LL partnership
128
What are the requirements to become either a broker and sales applicant in Texas?
- be at least 18, I citizen or lawfully admitted alien and a resident of Texas
- Satisfy the commission as to the outcomes honesty, trustworthiness, integrity
- complete the required courses
- provide fingerprints to the department of public safety
- complete a criminal history background check
- Pay appropriate fees
* sometimes the commission can set rules in the type of education that you may need to renew your license
129
What entity within the TREC is responsible for making decisions about license holders?
Education Standards Advisory Committee
130
Education Standards Advisory Committee
| Responsible for? #of members? Term/expirations?
Responsible for making decisions about licensing.
Consist of 12 members appointed by the TREC
Members serve staggered two-year terms
- On December 31 of an even number the terms of for licensee holder members into education members expire
- On December 31 of an odd number the terms of three licensee holder members and two education members expire and the public number expires
131
What can influence the value to the consumer?
production cost influence the value to the consumer
132
The Association of Real Estate License Law Officials (ARELLO)
An international Association of real estate regulatory that promotes consistent policies and standards for license law and enforcement of license laws
133
What are the three property type specializations?
1. Residential property
2. Commercial property
3. Investment property
* these are all (blank)
134
What are some types of professional organizations?
- Members of the national Association of realtors (NAR) known as Realtors
- Members of the national Association of real estate brokers known as Realtist
135
If you are not part of the National Association of Realtors (NAR) then you are known as what/who?
Sale person is not associated with an NAR are known as real estate licensees or agents
136
How old do you need to be to apply for real estate license?
18 years old
137
What is the experience requirement for an applicant for a brokers license?
At least four years of active experience in Texas as a license holder during the 16 months preceding the date the application is filed
138
When applying for a sales person’s license, he must have at least two semester hours of each of several core Real estate course is covering what topics?
Law of agency, last contract, promulgated contract forms, Real estate finance
139
The education standards advisory committee is comprised of how many general public members?
One public member
* what commission has only?
140
Who performs function of property estimation among the real estate specialist?
Appraisers
141
What geographical area may broker cover?
Area of geographical specialization
142
What is the investment property?
Any property held for investment purposes
143
Overhead expense is an example of what type of cost?
Production costs
144
Why are the categories of Real properties not absolute?
Because they often partially match with each other, In other words they often have overlapping uses
145
Which action is often used to define specific aspects of merely created law?
Court decisions
