Unit 1 Flashcards
Broker
any person or company licensed to buy, sell, exchange or lease real property for others and charge a fee
Real Estate Firm
company with a managing broker or principal broker (in TN) that is licensed for real estate
Principal Broker
in charge of all the agents
How long do you need to be an affiliate broker until you can be a principal broker?
3 years
Salesperson, associates or affiliate broker
employed by or associated with broker and real estate firm
Who is the listing agreement with?
principal broker of your firm
if you move firms does your listing go with you?
no, stays with firm it was listed with
What is TREC?
Tennessee Regulating Committee in change of licensing agents
appraisal
Developing an opinion of market value based on Three methods of valuing property
who requires appraisals?
lender
property management
Person or Company hired to manage and maintain property on behalf of owner
what do property managers do?
Finding tenants, collecting rent, maintaining and updating, repairing, protecting the owner’s investment and maximizing profits
In TN, do you need a special license for property management?
no
what are financing options?
bands, credit unions, mortgage banks, mortgage brokerage companies
what does federal law require mortgage originators join
- NMLS
2. National Licensing for Lenders
Subdivision
dividing a single property into smaller parcels
development
preparing the site for construction of improvemnets
improvement types
off site and on site
off site improvements
water, power lines, or drainage that are constructed on public land
on site improvements
new homes, clubhouse, etc. built on specific parcels
Are home inspectors licensed in TN?
yes
ASHI
American Society of Home Inspectors
Caveat Emptor
common law in many states that buyer must discover and verify all information for their purchase
What are most contracts contingent on?
home inspection
what do home inspectors examine?
foundation, chimney, water (structure and lot), mold, etc.
how can real estate agents get education
Continuing education, colleges/university courses, trade organizations, lunch and learns, homebuyer seminars
What are some related professions?
Lawyers, title attorneys, land use planners, tax assessors
who determines zoning?
county and city
What are the zoning classifications?
- residential
- commercial
- mixed use
- industrial
- agricultural
- special purpose
Why would someone want to buy property?
stability, investment, tax benefits, pride, security, community
Why would someone want to lease property?
finances limited, need flexibility, access to amenities, using funds for other purposes
What are the types of housing?
- single family detached
- apartment building
- condominium
- cooperative
- planned unit development (PUD)
- mixed use development (MUD)
- converted use properties
- factory built housing
What type of lease do you get for a cooperative
proprietary lease
What are the types of factory built housing?
- mobile
- manufactured
- modular homes
mobile housing
can be moved
manufactured housing
sits on a foundation that is permanent
modular home
house is delivered as a package; lot pre-built in the factory but assembled on the building site
Federal Fair Housing Laws
cannot discriminate on race, color, national origin, religion, sex, familial status, disability, creed
What are the classes in the FAIR housing laws?
- Race
- color
- national origin
- religion
- sex
- familial status
- disability
- creed
What happens to price when supply goes up and demand is constant?
prices go down
What happens to price when supply goes down and demand goes up?
prices go up
What are 2 features of real estate that affect the real estate market?
- uniqueness
2. immobility
What are factors affecting supply?
- labor force
- construction cost
- material cost
- government controls
- financial policies
- local government factors
Federal Reserve Board
establishes rate at which they will loan to lenders and then lenders establish rate they will lend to consumers
Local government control zoning
they can slow down growth of an area with zoning
What are the factors that affect demand?
- population
- demographics
- employment and wage levels
Niche marketing
based on demographics
Equity
the difference between what they owe on the property and what it’s worth
When do you get a Capital Gains Exemption
if lived in home 2 of the past 5 years
Tax Credit
if you are paying $10k and you have a $1k tax credit, it will come right off your taxes
If you get a tax deduction, what does it come out of?
income that is taxed
Are tax incentives permanent?
no
Advantages to investing in real estate
- high than average ROR or ROI
- Control
- Appreciate
- Equity build up
- leverage
- tax benefits
- capital gains
Can owners depreciate an asset?
yes for tax purposes
Annual Tax Depreciation
a way to reduce investment income
Basis
original sales price
adjusted basis
basis - total depreciation
what is capital gains based on?
adjusted basis
1031 Exchange
property is sold first then have 45 days to find property and 180 days to close on new property
Reverse 1031
replacement property is purchased before the relinquished or old property is sold
Disadvantages of real estate investing
- liquidity
- active management
- risk
- liability
Residential property
all property used for single-family or multifamily housing, whether in urban, suburban or rural areas
Commercial Property
business property, including office space, shopping centers, stores, theaters, hotels, and parking facilities
mixed use property
property that allows for two or more commercial and residential uses in the same building
industrial property
warehouses, factories, land in industrial districts, and power plants
agricultural property
farms, timberland, ranches, orchards
special purpose property
privately owned properties, such as places of worship, schools and cemeteries, as well as publicly held properties such as schools, municipal service buildings and parks
Equity
amount invested in a property
intrinsic value
higher value because of market preferences
Leverage
use of borrowed money to finance an investment
what does a 1031 allow you to avoid
federal taxation on a capital gain
What determines the value of a house?
what the seller accepts what the buyer offers
proprietary lease
document the corporation gives you to occupy a certain part of the corporation
What shows ownership in a cooperative
stock
