Lesson 1: Chapter 1 - Introduction To The Real Estate Business Flashcards
Brokerage
The business of bringing people together in a real estate transaction.
Real Estate Licensee
Acts as a point of contact between two or more people in negotiating the sale, purchase or rental of property (may be the the agent for the buyer or seller, or for both.)
Sponsoring Broker
All licensees are employed by this agent and conduct brokerage services in behalf of that agent. Must have a designated agent to supervise the licensees and run the office.
This agent is responsible for the actions of all licensees workings under the umbrella of that particular firm.
Leasing Agents
Bring together tenants and prospective rental properties.
Appraisal
The process of estimating a property’s market value based on established methods and the appraiser’s professional judgement.
Can be used for refinancing and insurance purposes.
In Illinois: In order to perform appraisals in Illinois, an appraiser license is required.
Property Manager
A person or company hired to maintain and manage property on behalf of its owner.
The scope of duties depends on the terms of the management agreement. Whatever tasks are specified, the manager must protect the owner’s investment and maximize the owner’s return on his investment.
In Illinois: property management requires a real estate license, and an individual real estate licensee must perform property management services under the supervision of his or her sponsoring broker.
Financing
The business of providing the funds that make real estate transactions possible.
Most transactions are financed by means of mortgage loans or trust deed loans secured by the property.
In Illinois: Mortgage brokers and the loan officers working for them must be licensed and registered in Illinois.
Subdivision
The splitting of a single property into smaller parcels.
Development
Involves the construction of improvements on the land. These improvements may be either on site or off site.
Offsite: such as water lines and storm sewers, are made in public lands to serve the new development.
Onsite: additions or enhancements within the buildings or lots being sold that increase the value of the properties within the development. These include roads and infrastructure or new buildings.
Home Inspection
Is a profession that allows practitioners to combine their interest in real estate with their professional skills and training in the construction trades or in engineering.
Home inspectors conduct a thorough visual survey of a property’s structure, systems and site conditions and prepare an analytics report that is valuable to both purchasers and homeowner.
In Illinois: home inspectors must be licensed.
Counseling
Involves providing clients with competent independent advice based on sound professional judgement.
Helps clients choose among the various alternatives involved in purchasing, using, or investing in property.
Real Estate Specialties
Brokerage, appraisal, property manager, financing, subdivision, development, home inspection, counseling, education, auctioning and other areas.
National Association of REALTORS (NAR)
Largest trade organization in the real estate business
5 Categories of Real Property
Residential Commercial Industrial Agricultural Special purpose
Residential Property
All property used for single family or multi family housing, whether in urban, suburban, or rural areas.
Commercial Property
Business property, including office space, shopping centers, stores, theaters, hotels, and parking facilities.
Industrial Property
Warehouses, factories, and land in industrial districts.
Agricultural Property
Farms, timberland, ranches, and orchards.
Special Purpose Property
Churches, schools, cemeteries, and government-held lands.
Market
A place where goods can be bought and sold.
Two Characteristics of Real Estate that govern the way the market reacts to the pressures of supply and demand
Uniqueness and Immobility
Uniqueness
Means that no matter how similar two parcels of real estate may appear, they are never exactly alike.
Each occupies its own geographic location, and two properties are never exactly the same inside.
Immobility
Refers to the fact that property cannot be relocated to satisfy demand where supply is low, nor do buyers necessarily make relocation decisions based on greater housing supply in a certain locale.
Factors that Affect the Supply Side of the Real Estate Market
Labor force
Construction and material costs
Government controls
Financial policies
Factors Affecting Real Estate Demand
Population
Demographics
Employment
Wage Levels
Illinois License Categories
Broker
Managing Broker
Leasing Agent
