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Real Estate Class > Chapter 1 > Flashcards

Chapter 1 Flashcards

1
Q

Brokerage

A

Bringing people together in a real estate transaction. A real estate licensee acts as a point of contact between two or more people in negotiating th sale, purchase, or rental of property.

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2
Q

Appraisal

A

The process of estimating a property’s market value based on established methods and the appraiser’s professional judgement. Most lenders require a professional appraisal by a licensed appraiser acompany loan package.

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3
Q

Property Management

A

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

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4
Q

Financing

A

The business of finding funds to make real estate transactions possible.

Most transactions are financed through mortgage loans or trust deed loans secured by property.

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5
Q

Subdivision

A

Is the splitting of a single property into smaller parcels. Development involves the construction of improvements on the land.

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6
Q

Home Inspection

A

Professional home inspectors conduct a thorough visual survey of a property’s structure, systems, and site conditions and prepare an analytical report that is valuable to homeowners and purchasers.

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7
Q

National Association of REALTORS (NAR)

A

The largest real estate organization. You must be a member of NAR to use the term REALTOR

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8
Q

Types of Real Property

A

Residential
Commercial
Industrial – warehouses, factories, power plants
Agriculture
Special Purpose – church, school, cemeteries

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9
Q

Supply and Demand

A

The forces of supply and demand impact the prices for goods and services.

When supply increases and demand remains stable, prices go down.

When demand increases and supply remains stable, prices go up.

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10
Q

Two characteristics that govern supply and demand in real estate:

A
  1. uniqueness: means that no matter how similar two parcels of real estate may appear, they are never exactly alike. Each property is in its own unique geographic location.
  2. Immobility: refers to the fact that property cannot be relocated to satisfy demand where supply is low.
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11
Q

What is land

A

The earth’s surface extending downward to the center of the earth and upward to infinity. Also includes soil.

Also the objects that are attached to the earth’s surface, such as boulders and plants.

Also, minerals and oil that lie way beneath the surface (subsurface)

Also includes the air above the earth, all the way into space (airspace)

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12
Q

What is real estate?

A

a piece of land plus any natual or artifical (man-made) improvements that are attached or have been added.

artifical examples: sidewalks, fences, buildings.
natural examples: trees, minerals, oil

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13
Q

Real Property

A

includes real estate and its bundle of rights

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14
Q

What is bundle of legal rights?

A

This is the legal rights of ownership that attach to ownership of a parcel of real estate. Legal bundle of rights include the following:
possession, control, enjoyment, exclusion, disposition (sell, convey, or gift the property).

PCEED

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15
Q

What is personal property?

A

Property that is movable. Examples, chairs, tables, money,bank accounts, bonds.

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16
Q

Personal property is also known as what?

A

Chattels and Personalty

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17
Q

What is a fixture?

A

It is personal property that has been affixed to the land or building. By law is becomes part of real property.

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18
Q

What is the legal test of a fixture?

A

This test is used to determine if it is personal property of a fixture.

  1. Method of attachment: How permanent is the method of attachment? Can the item be removed without causing damage to the property?
  2. Adaptation of real estate? Is the item being used as real property or personal property?
  3. Agreement between parties? (most important method) This is usually spelled out in the Sales Contract stating what goes and what stays. Have the parties agreed in writing?

Any item that the seller does not want included in the sales contract should be removed prior to viewing.

19
Q

What is a trade fixture?

A

It is personal property of a business owner that when attached to a rented space or building, remains personal property.

20
Q

Examples of trade fixtures

A

Bowling alleys, store shelves, bars, restaurant equipment.

21
Q

When must trade fixtures be removed?

A

Trade fixtures must be removed on or before the last day the property is rented.

22
Q

Is the tentant responsible for damages for removal of a trade fixture?

A

Yes, the tenant is responsible for any damage of removal of a trade fixture.

23
Q

If a trade fixture is not removed, who obtains the rights to it?

A

The landlord.

24
Q

What is location?

A

It is a economic characteristic of real estate. Also known as area preference or situs. Location does not deal directly with the geographic location of a property. Rather it deals more with the a person’s preference for a given area.

PREFERENTIAL LOCATION IS THE MOST IMPORTANT ECONOMIC CHARACTERISTIC OF LAND.

25
Q

What are the 3 physical characteristics of land?

A

Immobility: The geographic location can never be changed.

Indestructibility: Land is indestructible. Because of this it does not depreciate. Man-made improvements depreciate and can become obsolete which can reduce the land’s value.

Uniqueness: No two parcels are exactly the same.

26
Q

What is the name of the act that governs the practice of real estate?

A

The Real Estate License Act of 2000. The rules of the Act were established by the Illinois Department of Financial and Professional Regulation. This license law is Public Act 96.856 Chapter 225 of the Illinois Compiled Statues, Act 454.

27
Q

What is the purpose of real estate law?

A

To protect the public from fraud, dishonesty, and incompetence in real estate transactions.

28
Q

What is PITI in terms of home ownership?

A

It is principle, interest, taxes, and private mortgage insurance. The expenses that comprise of a monthly payment.

29
Q

What are the tax benefits of a homeowner?

A

Homeowners may deduct from their income:

  1. some or all of the mortgage interest paid
  2. real estate taxes
  3. certain other expenses
30
Q

State the expulsions of Capital Gains in reference to tax laws

A
  1. $500,000 is now excluded from capital gains tax for profits on the sale of a principal residence by married tax payers who file jointly
  2. Single tax payers are entitled to a $250,000 tax exclusion
  3. Exception may be used repeatedly, as long as homewoners have owned and occupied the residence for at least 2 years.
31
Q

Is Manufactured Housing personal property or real property?

A

If not connected permanently to the land, is considered movable, therefore PERSONAL PROPERTY.

32
Q

What must a licensee do when showing a property that is located in a flood area?

A

They must disclose that information.

33
Q

Is Fructus Naturales real estate or personal property?

A

Fructus Naturales – real estate: trees, shrubbs, grasses that do not require annual culvation is real estate.

34
Q

Is fructus industrial real property or personal proerty?

A

Annually culivated crops, such as wheat corn, veggies, fruit are personal property.

35
Q

What is severance?

A

changing real property into personal property or personal property into real estate.

ex: a tree (real property) is cut down and made into boards (personal property). when the boards are used to build a building it is changed to real estate.

36
Q

what is annexation?

A

changing personal property into real property.

ex. someone buys cement and stones and mixes them into cement, and constructs a sidewalk across her land. the owner has converted personal proerty (cement, stones) into real property.

37
Q

what is area preference or situs?

A

this is an econmic characteritic of real estate. it refers to a person’s perference for a given area. this is the most important economic characteristic.

38
Q

Does IL have salesperson?

A

No. IL no longer has salespersons. Brokers are the entry level licensees.

39
Q

What is the sponoring broker?

A

Its the company or the firm such as Caldwell, Centruy 21

40
Q

What is the managing broker?

A

The supervisor licencesee; person who carried the day to day operations

41
Q

residential properties are generally how many units?

A

between 1 to 4

42
Q

how is real property transferred?

A

By deed

43
Q

how is personal property transferred?

A

by bill of sale

Real Estate Class (11 decks)

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