Unit 1 Flashcards
Market
Place where goods or services are bought and sold
Purpose of Market
Allow exchange of goods or services at a FAIR PRICE
What determines Price
Largely dictated by Supply and Demand
*Brokerage
Business of bringing together a buyer and seller
How does licensee/broker become a Realtor?
Joining National Association of Realtors
Sponsoring Broker
Ultimately responsibly for the actions of all licensees at their firm
*Appraisal
Licensed professional uses established methods and professional judgement to estimate a property’s market value. Not tied to what it was bought for. Typically ordered by lenders to make sure they aren’t lending too much money
True or False: Appraisers must be licensed or certified for federally related loan transactions
TRUE
*Property Manager
Person or company employed by the property owner to manage the property.
*Property Management Agreement
Agreement that lays out the employment relationship and responsibilities of the property manager
*Financing
Lender provides money or funds to borrower/buyer so they can purchase the real estate.
Loan
Called the Mortgage. Mortgage is secured by a NOTE.
Note
Details buyers responsibilities to repay the mortgage
True or False: Mortgage brokers and loan officers must be licensed and registered in Illinois
TRUE
*Subdivision
Process of splitting single property into smaller parcels
*Development
Construction of improvements on load.
On-site - houses; increases value
Off-site - sewer & water; required for safety and sanitary purposes
*Home Inspection
Visual evaluation of the property and completes a report. Illinois home inspectors must be licensed
*Counseling
Furnish consumers or clients w/ the information needed to make informed decisions. ie Foreclosure
*Auction
Competitive bidding process used to transfer property. Auctioneers in IL must be licensed
Wholesaling
One property enters into contract to purchase property and quickly assigns the contract to another end purchaser who buys the property. Wholesaler earns profit as the “middleman”
*Types of Property
Residential, commercial, industrial, agricultural (farm) or special purpose (religious institution)
*Supply & Demand
Supply increases, demand stable, prices down
Supply low, all else the same, prices up
Demand increases, supply stable, prices up
Demand low, all else the same, prices down
Two Characteristics that govern how the real estate market reacts to Supply and Demand
Uniqueness and immobility. Because of these characteristics, the market generally adjusts slowly to forces of supply and demand
Uniqueness
Every piece of real estate is unique
Immobility
Fact that property cannot be moved or relocated
*Factors that affect Supply
Labor force and construction costs, less houses, higher prices
Government controls and Financial policies, ie interest rates; zoning
Changes in taxation
*Factors that affect Demand
Population - amount of people
Demographics - age, gender, income
Employment and wages
