Chapter 1 - Intro to Modern Real Estate Practices Flashcards
Brokerage
The business of bringing buyers and sellers together and assisting in negotiations for the terms of sale of real estate.
Real Estate Broker
A person or an organization acting as the agent for others in negotiating the purchase and sale of real property or other commodities for a fee.
Real Estate Salesperson
A person performing any of the acts included in the definition of real estate broker but while associated with and supervised by a broker.
Residential Property
A type of property that includes one to four dwelling units.
Commercial Property
Property that produces rental income or that is used in business. Properties with five or more dwelling units are considered commercial property.
Industrial Property
Property that is used by companies or persons for manufacturing, warehousing, or the assemblage of components.
Special Purpose Property
A category of real property created as a result of combining the land and its improvements for a single highest and best use.
Mixed-use Property
Any urban, suburban or village development, or even a single building, that blends a combination of residential, commercial, cultural, institutional, or industrial uses, where those functions are physically and functionally integrated, and that provides pedestrian connections.
Education Standard Advisory Committee (ESAC)
to regularly review and revise the curriculum standards, course content requirements, and instructor certification requirements for qualifying and continuing education courses
Salesperson License Requirements
180 hours; 60 hours principles of real estate, 30 hours Laws of Agency, 30 hours Law of Contracts, 30 hours Contract Forms, 30 hours Finance
Broker License Requirements
3600 ‘points’ of experience -> can be gained by type of sales
Economic Characteristics of Land
Scarcity, Improvements, Permanence of Investment, Area Preference
Physical Characteristics of Land
Immobility (can’t move it), Indestructibility, Nonhomogenity/Heterogeneity (no two parcels of land are the same)
Improvements
Changes or additional made to a property, such as walls and roads. These typically increase the value of a property, except in some cases of over improvement.
Non-homogeneity
A physical characteristic of land describing that land as a unique commodity.
Value
The present worth of future events
Price
The amount a purchaser agrees to pay and a seller agrees to accept under the circumstances surrounding a transaction.
Cost
The total dollar expenditure for labor, materials, and other items related to construction.
Supply
The amount of goods offered for sale within a given market at a given price during a given time period.
Demand
The amount of goods consumers are willing and able to buy at any given price during any given time period.
Demography
The study of the social and economic statistics of a community.
Sources of Law
US Constitution, Congress, State, Gov’t Agencies, Court Decisions, Common Law
TX Real Estate Dealers Act
(est. 1939) was the first law established for the state
TX Real Estate License Act
(est. 1949) the current law established for the state and administered by TREC
TREC
consists of 9 members; 6 brokers & 3 publicly appointed by state governor for a term of 6 years.
TACCB
Appraiser licensing
Agent
A person authorized to act on behalf of another.
Principal
The employer of an agent.
Customer
The party the agent brings to the principal as seller or buyer of the property.
General Agent
(broad) salesperson to broker, property manager to landlord. An agent with full authority over one property of the principal, such as a property manager.
Special Agent
(most common for salespersons between buyers/sellers). An agent with limited authority to act on behalf of the principal, such as created by a listing.
Listing Contract
A contract in which a property owner employs a real estate broker to market the property described in the contract.
Fiduciary Duty
That duty owed by an agent to act in the highest good faith toward the principal and not to obtain any advantage over the latter by the slightest misrepresentation, concealment, duress or pressure. (Care, Obedience, Accounting, Loyalty, Disclosure)
Fiduciary
A person in a position of trust and confidence, as between principal and broker; broker as fiduciary owes certain loyalty which cannot be breached under the rules of agency.
Caveat Emptor
Let the buyer beware. The buyer must examine the goods or property and buy at his or her own risk.
Buyer Representation Agreement
same as listing but for the buyer (listing agreement is for the seller)
Principle’s Responsibilities to Agent
Compensation, Information, Indemnification (re-imburse), Availability
Texas Deceptive Trade Practices Laws (DTPA)
governing: can’t represent that something is new when it is not, no advertisement with no intention of selling as advertised, work has been done on prop when it has not
Nat Association of Realtors (NAR)
est. 1908 - keeping up developments in the real estate field, improve standards and practices
Realtor
Only members of NAR may be called this - otherwise called licenses/agents
Appraised Value
calculated by an appraiser by one of these methods: market comparison approach, cost approach, income method
Market Comparison Approach
A means of comparing similar type properties, which have recently sold, to the subject property. Commonly used in comparing residential properties.
Cost Approach
An analysis in which a value estimate of a property is derived by estimating the replacement cost of the improvements, deducting therefrom the estimated accrued depreciation, then adding the market value of the land.
Income Approach
One of the three methods of the appraisal process generally applied to income producing property, and involves a three-step process – (1) find net annual income, (2) set an appropriate capitalization rate or “present worth” factor, and (3) capitalize the income dividing the net income by the capitalization rate.
Assessed Value
A valuation placed upon a piece of property by a public authority as a basis for levying taxes on the property.
Insured Value
The cost of replacing a structure completely destroyed by an insured hazard (similar to cost approach except it involves current pricing). To note, land is indestructible so is not included in calc.
Depreciated Value
The basis of a depreciable asset used to compute the taxable gain from its sale; the basis is acquisition cost plus capital improvements less accrued depreciation.
Broker Requirements
- Must have a designated office
- license must be displayed in place of business
