Section 1 Unit 1 Flashcards
Real estate professionals perform the following property-related functions:
- creation and improvement
- management and maintenance
- demolition
- investment ownership
- regulation
- transfer
Creation and improvement
Creating real properties from raw land involves capital formation, financing, construction contracting, and regulatory approvals.
Who are the key parties involved in creation and improvement?
The developer, the landowner, and the mortgage lender. Also involved are market analysts, architects, engineers, space planners, interior designers, and construction subcontractors.
Who are the experts who manage the legal aspects of the development project?
Include real estate attorneys, title companies, surveyors, property insurance companies, and government regulatory officials. The brokerage community, with the assistance of professional appraisers, usually handles the ownership and leasing transactions that occur over the many phases of development.
Management and maintenance.
All real estate, whether raw land or improved property, must be managed and maintained.
Who are the two principal types of managers?
property managers and asset managers.
What do property managers and their staff oversee?
specific properties on behalf of the owners, making sure the condition of the property and its financial performance meet specific standards.
Asset managers oversee groups of properties, or portfolios. What is their role?
to achieve the investment objectives of the owners as opposed to managing day-to-day operations.
Maintenance personnel include:
engineers, systems technicians, janitorial staff, and other employees needed to maintain the property’s condition.
What do demolition experts, in conjunction with excavation and debris removal experts do?
serve to remove properties that are no longer economically viable from the market.
What is Investment ownership?
A specialized niche in the real estate business is the real estate investor who risks capital in order to buy, hold, and sell real properties.
All real estate is to some degree is:
regulated by government.
The principal areas of regulation are:
usage, taxation, and housing administration.
Professional regulatory functions include:
public planners, zoning administrators, building inspectors, assessors, and administrators of specific federal statutes such as Federal Fair Housing Laws.
Rights and interests in real estate can be bought, sold, assigned, leased, exchanged, inherited, or
transferred from one owner to another.
Who is involved in right and interest transfers?
Real estate brokers and the brokers’ salespeople. Other professional participants are mortgage brokers, mortgage bankers, appraisers, insurers, and title companies.
Six primary functional areas are populated by professionals with the following specialties:
Creating, Managing & Maintaining, Destroying, Holding, Regulating, Transferring
Properties are classified as:
residential, commercial, or investment properties.
Residential property refers to property that is owned and…
used for habitation. Such properties may be further classified in terms of how many families they are designed to house, whether they are attached to other units or detached, and so forth.
Commercial property generally refers to retail and office properties, but may also include…
industrial real estate. The term “commercial” relates to the fact that the property can potentially generate income from a business’s usage.
Investment property refers to any property that is held by its owners for investment purposes.
Apartments, condominiums, cooperatives, and single-family homes may be considered as investment property if non-occupants own the property for investment purposes. These properties are also referred to as residential income properties.
Primary real estate brokerage activities involve performance of one or more of the following tasks:
locating a buyer for a seller
locating a seller for a buyer
locating a tenant for a landlord
locating a landlord for a tenant
A seller, buyer, landlord or tenant hires a broker to:
procure the opposite party to the sale or lease transaction. To help get the job done, the broker hires licensed agents as assistants.
The brokerage company consists of a broker and the broker’s agents, who together work to:
locate buyers, sellers, tenants and landlords for the broker’s clients.
In the modern brokerage environment, brokers and agents specialize along the following lines:
property type geographical area type of transaction type of client type of relationship
Since different properties have different features and potential buyers, brokers commonly choose to specialize in a property type. Thus there are:
residential agents
commercial agents (office, retail)
industrial agents
land agents
How do brokers and agents maintain current, accurate data on properties?
One must create an area of geographical specialization.
The principal types of transaction are:
sales, leases and subleases, exchanges, and options.
Each form of transaction involves:
particular legal documents and considerations.
Brokers increasingly represent buyers and tenants as well as sellers and landlords.
Since conflicts of interest may be involved, many brokers restrict their business to representing either buyers and tenants or sellers and landlords exclusively.
Some of the individual brokerage services that one might perform for a pre-set fee are:
comparative price analysis
database search
prospect screening
site analysis
Among the laws most relevant to agents and brokers are those relating to:
agency contracts disclosure environmental impact fair housing
The real estate industry is regulated by every level of government.
Federal and state statutes, as well as a large body of court decisions, generally referred to as common law, circumscribe how real estate can be developed, managed, and transferred.
In addition to federal, state, and local laws and regulations, the real estate industry is:
self-regulated by the codes of ethical conduct propounded by the industry’s many trade organizations.
For example, the National Association of Realtors® Code of Ethics not only reflects the law but sets an even higher standard of performance for member brokers and agents.
It is imperative for new practitioners to:
understand and abide by the many laws which regulate the industry.
License laws also define critical aspects of real estate brokerage, including:
procedures for handling escrow deposits and fees
procedures for advertising
guidelines for dealing with clients and customers
Real estate activities:
☞create, improve, manage, maintain, demolish, own, regulate, and transfer real properties
Property type specializations:
☞residential; residential income; office; retail; industrial; farm and ranch; special purpose; land
REAL ESTATE BROKERAGE:
☞procure a buyer or tenant for an owner or landlord, or vice versa
Forms of specialization:
☞by property type; geographical area; type of transaction; type of client; by form of business organization; or by form of client relationship
Skills and knowledge:
☞market conditions; law; financing; marketing; ethics; selling; communications; computer basics; and other skills
PROFESSIONAL ORGANIZATIONS:
☞promote interests of practitioners and enhance their professional standing
Regulation of business practices:
☞all facets of the industry are regulated by federal, state, and local laws; agents must understand relevant laws and adapt business practices accordingly
Real estate license laws:
☞the primary body of laws and regulations governing the licensure and conduct of real estate brokers and agents
☞license laws are administered and enforced under the jurisdiction of the state real estate commission
Which of the following ways of specializing is common in the real estate brokerage business?
By geography
Which of the following professionals involved in the real estate business are most concerned about procuring buyers and sellers for clients?
Broker and agents
People in the real estate business who primarily focus on creating new properties are
developers
The term “commercial property” generally refers to
Retail, office and industrial properties
What is an advisory service provider?
A broker who render real estate services for a fee
Property management and real estate asset management are both real estate management professions. The primary distinction between the two is that
Property manages handle day to day operations while asset managers manage the portfolios of properties.
The level of government which is most active in regulating real estate licensees is the
state government.
