Unit 1: Basic Real Estate Concepts Flashcards
Two major classifications of property:
real property and personal property
Define real property
defined as the land itself, the improvements thereon, benefits, and rights inherent in the ownership of real estate
So the land, everything that is permanently attached to the land and everything that is appurtenant (or goes with) the land.
**wraps in land definition as well
Define Personal Property or Personalty
is considered to be all property that does not fit the definition of real property. Primary characteristic is movability. Includes such tangibles as furniture, clothing, money, bonds and bank accounts.
What is a chattel? Give examples.
is an item of moveable personal property. furniture, clothing, money, bonds and bank accounts.
Define Land
land is defined as the earth’s surface extending downward to the center of the earth and upward to infinity, including things permanently attached by nature such as trees and water. Minerals and substances below earth surface and airspace above up to infinity both ways.
How can you separate surface, subsurface and airspace rights?
Severing by conveyance
A special tract of land is commonly referred to as
a parcel
Define Real Estate (or realty)
is defined as land at, above, and below the earth’s surface, including all things permanently attached to it, whether natural or artificial.
What makes the term real estate broader?
because it not only includes the physical components of land by nature but also human-made permanent improvements on and to the land.
What are land improvements?
Land is referred to as improved when streets, utilities, sewers and other improvements are brought to the land, making it more suitable for building
What are the bundle of rights?
rights of ownerships. including the right to possession and use, the right to exclude others and the right to profit from the land and the right to dispose of encumber of or encumber the land
Define Encumber
restrict or burden (someone or something) in such a way that free action or movement is difficult
What are tenements and hereditaments
Tenements are any structures attached to the land
Hereditaments are any interest in real estate capable of being inherited
What are the seven characteristics that define the nature of real property and affect its use.
They fall into two categories: Physical characteristics and Economic characteristics
Physical characteristics are immobility, indestructibility and uniqueness
Economic characteristics are scarcity, location, improvements and permanence of Investment
What is a disadvantage of owning real estate?
Lacks liquidity
difficult to invest in without some degree of expert advice
rarely can a investor sit idly by, requires management decisions must be made
high degree of risk is involved in real estate
What is the highest and best use?
is the use that will give the owners the greatest actual return on their investment.
What are the advantages of owning real estate?
well located and fairly priced real estate investments have shown a good rate of return
can use the leverage of borrowed money to finance a real estate purchase and feel relatively sure that if held long enough, the asses will yield more money that it cost to finance the purchase
keep with the rate of inflation
tax advantages
Define Brokerage
the business of bringing together people interested in completing a real estate transaction
Real estates sales professionals in North Carolina usually begin their career in apprenticeship roles as
provisional brokers (must be under real estate broker-in-charge)
North Carolina’s real estate license law (G.S. 93A-1 & 2) stipulates that a person must be licensed as a real estate broker if he or she
lists or offers to list, sell or offers to sell, buys or offers to buy, auctions or offers to auction, negotiates the purchase, sale or exchange of, lease or offers to lease, rents or offers to rent any real estate for others for compensation or the promise of compensation.
What is an appraisal
the process of estimating the values of a parcel of real estate
What is property management and what might me some of the responsibilities be?
someone who handles the operations of a property for its owner is involved in property management.
may be responsible for soliciting tenants, collecting rents, altering or constructing new space for tenants , ordering repairs and generally maintaining the property.
Define financing
the business of providing the funds necessary to complete real estate transactions
What is property development?
includes the work of developers or subdividers who purchase raw land, divide it into lots, build roads, and install sewer systems.
What is counseling?
providing competent independent advice and guidance on a variety of real estate problems
Education
is the provision of information to both the real estate practitioner and the consumer
What are the 5 categories that real estate are classified into?
- Residential - all property used for housing, from acreage to small city lots, both single-family and multifamily, in urban, suburban and rural areas
- Commercial - business property, including offices, shopping centers, stores, theaters, hotels, parking facilities
- Industrial - warehouses, factories land in industrial districts, and power plants
- Agricultural - farms, timberland, ranches and orchards
- Special Purpose - churches, schools, cemeteries and government-held lands.
What is a market?
a market is a place where goods are bought and sold, where value for those goods i established, and where it is advantageous for buyers and sellers to trade.
the function of the market is to facilitate this exchange by providing a setting in which the supply and demand forces of the economy can establish market value. free market and local in nature.
Explain supply and demand in the real estate market
when supply increases, prices drop as more producers compete for buyers; when demand increases, prices rise as more buyers compete
when the market cannot meet the demand, production increases to take advantage and in periods of oversupply, production slows or stops
What factors affect supply in the real estate market?
labor force, construction costs, government controls and monetary or financial policies.
What role does the Federal Reserve Board (the Fed) play?
establishes a discount rate of interest for the money it lends to commercial banks. That discount rate has direct impact on the interest rates the banks charge to borrowers, which in turn plays a significant part in peoples ability to buy homes.
What factors affect demand in real estate?
population, demographics and employment as well as wage levels
What are business cycles?
What causes business cycles?
4 stages of business cycles?
the upward and downward fluctuations in business activity.
caused by population growth, taxes, interest rates, wars and oil embargoes
expansion, recession, depression and revival
