Unit 1 Flashcards
Real Estate Brokerage
The business of bring people together in a real estate transaction conducted by a real estate broker.
Real Estate Broker
A person or company licensed to buy, sell exchange or lease real property for others compensation.
Real Estate Licensee
A person who has satisficed the requirements of the WA Real Estate Commission.
Appraisal
The process of developing an opinion of a property’s market value.
Property Management
Property Manager
A person or company hired yo maintain and manage property on behalf of the property owner.
Management Agreement
The basic responsibility of the property manager is to protect the owner’s investment while maximizing the owner’s financial return.
Financing
The business of providing the funds that make real estate transactions possible through loans secured by a mortgage or deed of trust on the property with funding provided by commercial banks, thrifts, credit unions, mortgage bankers, and mortgage brokerage companies.
Subdivision & Development
Involve splitting a single property into smaller parcels (subdivision) and constructing improvements on the land (development).
On-site & Off-site
One-site: New homes or recreational amenities made on individual parcels.
Off-site: Water lines and storm sewers.
Home Inspection
An inspection report will show results of a thorough survey of observable property conditions.
(Good for both parties)
Real Estate Counseling
Involves independent advice based on sound professional judgement regarding how to buy, sell or invest in property.
Property Types
6
Residential: Property used for single or multi family.
Commercial: Business property. Office space, shopping center, stores, theater, hotel and parking.
Mixed Use: Property that allows 2 or more commercial and residential uses in the same building.
Industrial: Warehouses, factories, land in industrial districts and power plants.
Agricultural: Farm, timber, ranches and orchards.
Special Purpose: Privately owned property. Place of worship, schools, municipal service building and parks.
Discrimination
The provision of housing and related services is prohibited by federal law.
Real estate Market
Reflects the principle of supply and demand.
Supply & Demand
When the supply increases relative to demand- the prices go down.
When the demand increases relative to supply- the prices go up.
Uniqueness
The fact that no two properties are the same.
Immobility
Refers to the fact that property cannot be relocated to fit demand where supply is low, nor can buyers relocate to areas with greater supply.
Government Control and Monetary Policies
The Federal Reserve Board (FED) establishes discount rate of interest for the money it lends to commercial banks.
The Federal Housing Administration (FHA) and the Government National Mortgage Association can also affect the amount of money available to lenders for mortgage loans.
Tax Deductions
Home owners may deduct from their gross income some or all of the mortgage interest paid up to certain point. Home owners may also deduct certain loan originations fee and loan discount points.
Home buyer can benefit from..
Tax deductions, exclusion of gain on a sale of the home, and tax credits when available.
Advantages of real estate investing
- Rate of return
- Greater Control
- Appreciation
- Equity build up
- Leveraging funds
- Tax benefits of depreciation
- Deductions
- Capital gain
Disadvantages of real estate investment
- Liquidity
- Active Management
- Risk
