Unit 1: Introduction to Modern Real Estate Flashcards
abatement
elimination or reduction of real estate taxes to attract new business to an area (tax incentives)
broker
Acts as an agent of the buyer or the seller (or both) in negotiating the sale, purchase, or rental of property.
business cycle
upward and downward fluctuations in business activity through the stages of expansion, recession, depression, and revival
common law
The body of rules and principles founded on tradition and court decisions.
demand
the amount of goods consumers are willing to buy at a given price during a given time period
demographics
the study and description of a population, i.e. size, growth, density, distribution, and vital statistics
market
a place where goods can be bought and sold
NAR
National Association of Realtors
sales agent
A license holder employed by or associated with a broker who conducts brokerage activities on behalf of the broker for a fee or commission.
seven sources of law
Affect ownership and transfer of real estate. These sources are:
1. Constitution of the United States
2. laws passed by Congress (i.e. federal fair housing laws)
3. federal regulations adopted by the various agencies and commissions created by Congress
4. state constitutions
5. laws passed by state legislatures
6. ordinances passed by cities, towns, and other local governments
7. court decisions (common law)
supply
the amount of goods for sale within the market at a given price during a given time period
Texas Real Estate Commission
Established in 1949, the commission’s purpose is to protect the public from license holders in real estate services in accord with state and federal laws.
Oversees real estate brokerage, appraisal, inspection, home warranty, and time-share interest providers.
TRELA
Texas Real Estate License Act
Texas Real Estate License Act
The purpose is to protect the public through regulation of real estate license holders, real estate inspectors, residential service companies, and entities offering time-share interests.
TREC
Texas Real Estate Commission
residential brokerage
Involves the sale and purchase of a residential property.
examples of real estate-related disciplines
appraising, lending and financing, property inspection, property development, real estate counseling, real estate education, title insurance and abstracting, urban planning, time share sales, petroleum landspeople, and easement and right-of-way registrants
Uses of Real Property (7)
residential, commercial, industrial, mixed-use, agricultural, special purpose
residential property
all property used for housing, from small city lots to acreage, both single-family and multi-family, in urban, suburban, and rural areas.
commercial property
business property, including offices, shopping centers, stores, theaters, hotels and parking facilities.
industrial property
warehouses, factories, and land in industrial districts.
mixed-use property
any lawful combination of the other five basic categories of real property permitted by local zoning.
special purpose property
places of worship, schools, cemeteries, and government-held lands.
agricultural property
farms, timberland, pastureland, ranches, and orchards
ESAC
Educational Standards Advisory Committee
Educational Standards Advisory Committee
Main objective is to review and revise curriculum standards, course content requirements, and instructor certification requirements.
ESAC recommends, while TREC adopts and makes rules.
precedent
By applying and interpreting laws in relation to a specific event, a court decision expands the meaning of the law, establishing a precedent that may be used in as a standard in subsequent similar cases.
Texas Appraiser Licensing and Certification Board (TALCB)
Independent nine-member board housed within TREC that licenses real estate appraisers in Texas under state and federal laws.
A real estate license applicant must:
- Be 18 years or older
- Be a citizen of the United States or legal resident of Texas
- Successfully completed 180 hours of required education, including 60 hours of real estate principles, 30 hours of law of agency, 30 hours of law of contracts, 30 hours of promulgated contracts, and 30 hours of real estate finance.
- Pass a license examination to prove adequate knowledge of real estate.
seven basic characteristics of real estate
- relative scarcity (e)
- improvements (e)
- permanence of investment (e)
- area preference (e) - the most important economic characteristic of land
- immobility (p)
- indestructibility (p)
- nonhomogeneity (p)
These characteristics fall into two broad categories: physical and economic
Economic characteristics of real estate
relative scarcity, improvements, permanence of investment, and area preference
Physical characteristics of real estate
immobility, indestructibility, nonhomogeneity
relative scarcity
refers to the total supply of land as fixed (I.e. NYC) or the use of land is limited (I.e. flood plain)
improvements
influences the value of land as well as other parcels of land in a positive or negative way
permanence of investment
considers the usefulness of improvements now and 20–30 years in the future
area preference
also known as situs, refers to a person’s choice or preference for a given area, factors include school districts, walkability, etc.
immobility
Land, which is the Earth’s surface, is immobile. The geographic location of any given parcel of land can never be changed.
indestructibility
Due to the permanence of land, it cannot be depreciated, and therefore is not insurable.
non homogeneity
No two parcels of land are ever exactly the same.
value
the amount of goods or services considered to be a fair and suitable equivalent for something else
subjective value
value affected by the perception of the individual. for example, an updated kitchen has no value to someone who dislikes cooking
price
the amount of money ultimately paid for a property
cost
the capital outlay for land, labor, materials, and profits necessary to bring a property into existence
objective value
value based on facts. for example, updated kitchen vs. outdated kitchen, upgraded features
factors affecting supply
labor supply, construction costs, government controls and policies
factors affecting demand
population, demographics, employment/wage levels
secular trend
a long-term trend that tends to be smooth and continuous, most affected by population growth, technological advances, capital accumulation, etc.
