The Business of Real Estate Flashcards
Major divisions of real estate business
- brokerages
- property development
- property management
- property appraising
Business brokers
Brokers who sell businesses and are required to have a real estate license
Financing/Investment Firms
Any individual firm that owns and/or invests in real estate for profit
Mortgage brokers
The business of providing financing, loan processing, servicing or packaging
Educators
Teachers of real estate concepts
Urban planning
Process concerned with development/ design of land use for urban entitites
Government divisions
Entities such as EPA or Forest Services affecting real estate business
Escrow Services
Organizations that fulfill escrow instructions and handle transaction closings
Title companies
Organizations that analyze title to property and issue title insurance
Brokerages
Function to bring buyers and sellers together for real estate transactions, charging a fee called commission
Brokerage specializations
- residential
- business
- commercial
- industrial
- farm or agricultural properties
- property management
- leasing
- exchanging
Real Estate Brokerages
- a company also referred to as the Entity and the Employing Broker
- must obtain entity license from department of real estate
Error and Omissions
Insurance that covers the company and agents form lawsuits for any error or omission that took place in a transaction
Liability Insurance
General insurance policy that would cover customer injuries, customer property damage
Umbrella policy
Extended coverage where primary liability policy limits end
Real estate brokerage can be organized as one of these three types of business entities …
- Partnership
- Corporation
- Limited Liability Company (LLC)
Partnership
Partnership with a managing general partner who is licensed as the designated broker
Corporation
A lawfully organized corporation that is registered with the Arizona Corporation Commission and that has an officer licensed as the designated broker
Limited Liability Company
A lawfully organized liability company that has a member or manager licensed as the designated broker
Broker Licenses
- Designated broker
- Managing broker
- Associate broker
Designated broker
Licensed as a broker and designated to act on behalf of employing brokerage (entity)
Managing broker
Appointed by designated broker to assist with daily functions
Associate broker
Supervised by designated broker, can be hired as designated broker
Subdividers
Individual or entity that takes raw land and does planning for its best use
Land developers
Improve lots by adding buildings, employ architects and builders
Property Managment
The special management for income properties such as apartment complexes, condominiums, and commercial buildings
Appraising
Appraisers can work for county assessors, banks, or government
Independent Contractor
Must be licensed must receive all income as commissions and must posses written contract outlining status
Commission
All commissions negotiated, no industry standard. Typically a percentage of the sales price, but could be a flat fee
Commission sharing brokerage
Agent is paid a percentage of total commission
100 Percent brokerage
A salesperson earns 100% of the commission minus a flat fee owed to the broker. Also required to pay a monthly office fee, and will have to pay business expenses
