Introduction to Modern Real Estate Practice Flashcards
Includes commercial property used for manufacturing, storage, distribution centers, research, warehousing, data centers
Industrial Real Estate
Explain Article 11 of the National Association of REALTORS® Code of Ethics.
Article 11 states that a REALTOR® may provide a service they are not specialized in only after fully disclosing their lack of experience, or if the REALTOR® obtains assistance from someone competent in the field, in which case, the client must be informed.
Who is on the Education Standards Advisory Committee?
12 members, including license holders, education members, and a public representative.
What is the ESAC?
Education Standards Advisory Committee
What is the function of ESAC?
To review and revise curriculum standards, course content and instructor certification requirements for both Core and MCE courses.
The actual piece of the earth, including anything below the surface of the land and the air above it.
Land
Made up of the land & any improvements attached to it
Real Estate
Real estate PLUS the bundle of rights that come with ownership of it
Real Property
Describes items that can easily be removed from the land
Personal Property
The right to use or cross someone else’s land for a specific purpose.
easement
The economic characteristic that informs the economic principle of supply and demand
Scarcity
An economic (not geographic) preference for a particular location
Situs
Refers to the fact that real estate exists in a fixed location and cannot be moved:
Fixity
The relative difficulty of converting an asset to cash without loss of value.
Illiquidity
Refers to the indestructible characteristic of land.
Durability
The price for which a property will sell if offered openly under normal conditions.
Market value
Supply and price move in…
opposite directions
What contains Fair Housing laws, community property laws, and homestead laws?
The U.S. Constitution and the State Constitutions
TREC has two main functions:
- To enforce all real estate-related statutes in The Texas Real Estate License Act (TRELA)
- To adopt and enforce new rules governing the practice of real estate
A Texas law that requires a commission, called the Sunset Commission, to evaluate every state agency every 12 years
Sunset Act
Who requires sponsorship to practice real estate?
A sales agent
The role of professional organizations in the real estate industry is…
to provide education and guidance to improve the practice of their members.
A REALTOR® must belong to…
at least one board in Texas.
An impartial, qualified appraiser’s opinion of the value of a specific property on a specific date, supported by relevant market information.
Appraisal
A very educated and data-driven approach to finding the market value of a property
An appraisal
A method of estimating the value of a property by determining how much it would cost to replace the building or other improvements, minus the cost of depreciation, plus the value of the land itself
Cost to replace
a property appraisal method that estimates value by comparing the subject property to the sales prices of similar properties in the same market area
Sales comparison approach
A method of estimating the value of a property by applying a rate of return to the net income it produces
Income approach
The appraiser will compare estimates they made based on the cost approach, sales comparison approach, and/or income capitalization approach.
Reconciliation - since different methods will yield different results for the same property, the appraiser will reconcile these differences and come to a single number.
A report that compares the prices of sold homes that are similar to the subject property
A comparative market analysis
Good comps are properties…
within a quarter-mile of the subject property; with similar bedrooms, bathrooms, and square footage; sold within the last six months.
A broker’s opinion of the value of a piece of real property, given in writing
Broker Price Opinion (BPO)
A a market condition in which the number of properties for sale does not meet the demand (number of people looking to buy).
A seller’s market
The pricing and negotiations of a transaction are often in favor of the seller in this type of market
A seller’s market
the condition of having fewer buyers than the supply of homes for sale in the area
A buyer’s market
The average number of months it will take to sell a house in a buyer’s market is…
six months or more.
When an appraisal report is not available, what provides the BEST data for setting a listing price?
the price that willing buyers have recently paid for similar properties in the area
A seller is more likely to want to work with an agent who uses the words “______ _______” rather than “price reduction.”
“price adjustment”
The NAR® Code of Ethics is reviewed and updated ____________.
annually
What is the difference between a client and a customer?
A client has an agency relationship with you or your broker, & a customer does not.
To avoid _______, a license holder should only give factual information from reputable sources, avoid speculation, and point potential buyers to the resources that can help with questions that you shouldn’t answer.
misrepresentation
Carelessness in the work that needs to be accomplished.
Negligence
Usually occurs when a license holder attempts to facilitate a type of transaction that they have never attempted
Incompetence
Avoid getting into trouble for misrepresentation by…
citing the source of any information you provide.
Any issues with the property should be recorded on the _______ _______ _______, a form every seller is required to provide with a potential buyer with the contract.
Seller’s Disclosure Notice
The illegal act of a license holder mixing their own money with a client’s or customer’s money.
Commingling
The act of a broker or sales agent using a client’s or customer’s money for their own use
Conversion
An exaggeration to accomplish a goal
Puffing
A contract or form that TREC requires license holders to use
Promulgated contract/form
In Texas, to belong to the local MLS, the REALTOR® must…
belong to at least one board in Texas
What is the only scenario in which you do NOT need a real estate license to sell or lease a property?
If you are not receiving any commission from the sale
True or False:
A real estate license is NOT required when a person is selling their portion of a joint ownership in a property.
True
True or False:
Having a Recovery Fund payment made as a result of an improper transaction would not make the license of a salesperson inactive.
True
Land is most valuable when it is in…
short supply & in high demand.
Duplex, triplex, or fourplex residences are all considered ________ residences.
Multifamily
Primarily made up of property that is used for business:
Commercial Real Estate
Involves locating property, deciding how it can be best used, and then building on it:
Property Development
The actual piece of earth, including anything below the surface of the land & the air above it:
Land
Made up of the land & any improvements attached to it:
Real estate
What are the 3 unique physical characteristics that make land special & different from personal property?
~ Indestructibility/durability
~ Immobility
~ Non-homogeneous
Refers to the permanence of land:
Indestructibility
Created solely by demand for land in particular areas:
Economic scarcity
Land is most valuable when it is in _______ ________ & in _______ ________.
Short supply & high demand
