Unit 1: Real Estate Specializations Flashcards
Brokerage
- The business of bringing people together in a real estate transaction
- Activities: help others buy, sell or lease real property
Salesperson/Broker-associate/Provisional broker
A person employed by or associated with a broker and may not provide brokerage services independently
Appraisal
The process of developing an opinion of a property’s market value, based on established methods and the appraisers professional judgement
(Appraisers must be licensed by the state)
Property Management
The property manager is a person or company hired to maintain and manage property on behalf of the property owner
-The Property Manager must be a licensed real estate broker
-Brokerage firms may provide property management services
Financing
The business of providing funds for real estate sales transactions
Mortgage Loan Originators
Registered with a Nationwide Multi state Licensing System
Licensed by state
Subdivision
Dividing a single property into smaller parcels
Development
Site preparation, construction of structures, and other improvements
Home inspection
Combines a practitioners interest in real estate with skills and training in construction trades, some states require licensing
Counseling
-Provide clients with information needed to make informed decisions
-Help clients choose among the various alternatives involved in purchasing, leasing, using or investing in real estate
What are the six categories of real estate?
- Residential
- Commercial
- Mixed use
- Industrial
- Agricultural
- Special purpose
Residential Real Estate
Where people live
Single-family and multifamily housing
Commercial Real Estate
Office, Retail, Entertainment, Parking Structures
Mixed Use Real Estate
Commercial and residential uses in the same building or development
Industrial Real Estate
Warehouse, Manufacturing, Production Facilities, Power Plants
Agricultural Real Estate
Farms, Timberland, Ranches, and Orchards
Special Purpose Real Estate
Places of worship, schools, museums, cemeteries, municipal service buildings, parks
(Can be privately and publicly owned)
What are the 3 factors affecting supply of real estate
- Demand
- Construction costs
- Interest rates
What are the 3 factors affecting demand of real estate?
- Demographics
- Economy
- Wages
Three Deductions allowed on a first and second residence
- Property Taxes
- Mortgage Interest
- Points paid on loans used to improve or acquire (must itemize to take the deduction on tax return
Capital Gains
Short term gain
Property held 12 months or less is taxed at ratepayers ordinary income tax rate
Capital Gains
Long term gain
Property held more than 12 months is taxed at a different rate than ordinary income
Maximum gain from sale for single taxpayer
$250,000
Maximum gain from sale for joint taxpayer
$500,000
How long does a taxpayer have to own and occupy property prior to sale to be excluded from tax?
Two of the five years, does not have to be consecutive
Depreciation
AKA Cost Recovery
What is the residential property time allowance over for depreciation updates?
27.5 years
What is the commercial property time allowance over for depreciation updates?
39 years
What are the 4 benefits of real estate investment
A Cash Flow
B Tax Benefits
C Potential Appreciation
D Principal reduction
Appreciation
Increased value
