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88 Cards in this Set
- Front
- Back
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Brokerage |
The business of bringing two or more people together in a real estate transaction |
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Broker |
A person or company licensed to buy, sell, exchange, or lease real estate for others and charge for services |
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Salesperson/sales associate |
A person who performs real estate activities while employed by a licensed broker |
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Associate license |
Licensed real estate sales person who is employed or associates with a broker to perform activities on behalf of the broker |
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Real estate licensee |
A person who has skills and knowledge to be licensed as a real estate broker or salesperson |
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Appraisal |
The process of developing an opinion of a property’s market value based on established methods & the appraiser’s professional judgement - appraiser must be federally certified & some states require certification |
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Property management |
The maintenance and management of property on behalf of property owner - protect the owner’s investment to maximize owner’s return |
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Financing |
The business of providing funds that make real estate transactions possible |
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Subdivision & Development |
Subdivision: dividing a single property into smaller parcels Development: involves preparation of a site and construction of structures or other improvements — on-site e or off-site - on-site: new homes, recreational amenities, etc. are made on individual parcels - off-site: water lines, storm sewers, etc. are made on public lands to serve new development *** subdivision & development normally related, but can occur separately. |
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Single-family |
Home that stands alone, detached |
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Apartment building indium |
Modern high rise structures that may offer residents amenities - can be low rise |
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Condominium |
- typically a unit, but may include single-family & commercial - rental or ownership - relieves care & maintenance responsibilities are handled by a governing association to which tenant pays fees |
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Cooperative |
Owners don’t own the unit; instead, each owner owns shares in a cooperation that holds the real estate title - each shareholder has a proprietary lease & pays fees to relieve care & maintenance responsibilities |
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Planned unit developments (a.k.a. PUDs & master-planned units) |
- may consist of only residencies but can also serve to merge land uses such as housing, recreation, & commercial units into one self-contained development - planned under zoning ordinances that often permit maximum use of one space by reducing lot sizes & street areas - owners don’t have direct ownership interest in common areas & pay an association fees for maintenance of areas - could be a small development of a few homes or an entire planned community |
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High rise developments (a.k.a. mixed-use developments (MUDs)) |
- combines office space, stores, theaters, & apartments - usually self-contained |
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Converted-use properties |
- structures that have been converted residential use - developers find this more financially & aesthetically pleasing that demolishing a sound structure |
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Factory-built housing |
- once known as mobile homes - low production cost due to assembly line-type construction that’s not affected by weather |
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Modular home |
Assembled at a building site on a prepared foundation which cuts time and cost |
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Fair housing |
The decision to purchase or lease housing based on finances & personal preferences |
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Home inspection |
Combines a practitioner’s interest in real estate with skills & training in the construction trades to visually survey a property’s structure, systems, and site conditions to create an analytical report that’s valuable to home buyers & owners - often leads to recommendation for further examination |
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Supply |
Residential & commercial land & structures available to sell at a given price |
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What happens when supply is greater than demand? |
Prices fall |
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What affects supply? |
1. Labor force — shortage of skilled labor and materials, increase in material costs, higher transfer costs, & increased construction costs - increased construction costs can transfer to buyers & tenants via sales & rent prices 2. Governmental controls & monetary policy — The Federal Reserve Board (The Fed) impacts commercial banks by controlling discount points/rates on mortgages The Federal Housing Admin. (FHA) & the Government Nat’l Mortgage Assoc. (Ginne Mae) impacts lending 3. Environmental regulations affect value & supply of land 4. Real estate taxation 5. Land-use controls 6. Building codes 7. Zoning ordinances *** careful planning can help stabilize and/or increase real estate values |
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Demand |
Okay |
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Counseling |
Involves providing clients with competent & independent advice based on professional judgement |
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Education |
Courses & seminars that cover real estate topics |
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Residential |
All property used for single-family or multi-family housing, whether urban, rural, or suburban |
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Commercial |
Business property, including office space, shopping centers, stores, theaters, hotels, & parking facilities |
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Supply |
Residential & commercial land & structures available to sell at a given price |
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What happens when supply is greater than demand? |
Prices fall |
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Agricultural |
Farms, timberlands, ranches, & orchards |
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Demand |
Quantity of homebuyers & businesses seeking to buy |
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What happens when demand is greater than supply? |
Prices rise |
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What happens when demand is greater than supply? |
Prices rise |
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Stable market |
When supply & demand is balanced |
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What effects demand and how? |
1. Population — Social concerns, economic changes, & population shift 2. Demographics — Number of occupants per household, ratio of adults to children, number of retirees, income, lifestyle, & hobbies 3. Employment & wage levels — Determines purchase or lease decision, determines budget, market may be drastically affected by major employer moving in or shutting down *** HOW PEOPLE SPEND THEIR MONEY DEPENDS ON CONSUMER CONFIDENCE, WHICH IS BASED ON PERCEIVED JOB SECURITY, AVAILABILITY OF CREDIT, & IMPACT OF INFLATION |
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List some marketplace advantages for homeowners. |
- appreciation may bring profit in the future - ownership interest increases as mortgage debt decreases, which presents two options. 1 = equity loan 2 = equity can be realized & added to sale of the property ***PROFIT FROM SALE ISN’T TAXED!!!! |
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What are some tax advantage of home ownership? |
- some mortgage interest can be deducted from gross income - loans made after 12/14/2018 may deduct up to $750K - loans made before 12/14/2018 are not affected unless more that $1M - if loan was made before 12/14/2018, interest is deductible if not greater than the original loan amount - state & local real estate taxes can be itemized up to $10K - certain origination fees & discount points can be deducted - investment real estate is subject to tax incentives & other incentives - tax laws recognized depreciation of physical structures & is deductible ***TAX LAWS FOR REAL ESTATE INVESTMENTS VARY FEDERALLY, STATEWIDE, & LOCALLY ***CONSULT A TAX PRO FOR ADVICE |
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Appreciation |
An increase in property value or worth due to economic or related causes which may prove to be temporary or permanent |
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What factors contribute to appreciation? |
- residential near employment, shopping, & amenities - commercial near transportation, supplies, & sources of employees |
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Equity buildup |
Portion of the loan directed toward to principal rather than the interest, plus any appreciation value - may decrease due to natural disaster and/or economic conditions, even if property isn’t sold - equity isn’t realized as cash unless property is sold |
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Depreciation |
A loss of property value do to any cause |
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Leverage |
The use of borrowed money to finance an investment profit from the sell of an asset |
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How can an investor receive the max return on an investment ? |
- small down payment - low interest - spreading payments for longest amount of time possible |
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Capital gain |
Profit from sell of an asset |
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How can you avoid federal taxation on capital gain? |
Exchange investment property for one of equal value - unlimited exchanges - strict rules on exchanges |
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How does exchanging investment property avoid federal taxes? |
- taxes will be deferred until property is sold |
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Liquidity |
Ability to sell an asset and convert it into cash at a price close to its true value & in a short period of time |
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Why aren’t investment properties highly liquid in a short time period? |
- investor may have to sell at a low price to sell quickly - if markets are down, an investor who’s refinancing will have to settle for what the market dictates |
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How do uniqueness & mobility/immobility impact the market? |
The market may adjust slowly & in uneven spurts - homes can be withdrawn from market due to low prices that result from supply > demand - demand > supply means a delay in sales & construction, especially with factors such as natural disasters & financial market issues ***THESE TWO FACTORS ARE WHY REAL ESTATE MARKETS ARE LOCAL |
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What are some tax advantages of homeownership? |
- some mortgage interest can be deducted from gross income - loans taken out after 12/14/2018 may deduct up the $750k - loans taken out before 12/14/2018 are not affected unless they’re more than $1M - if loan was generated before 12/14/2018 & refinanced, interest is deductible if not greater than original loan amount - state & local real estate taxes can be an itemized deduction up the $10k - certain loan origination fees & loan discount points can be deducted |
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How does homeownership benefit married couples? |
- filing jointly can exclude up to $500,000 in sales profit |
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Land |
The earth’s surface extending downward to the center & upward to infinity |
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What are physical characteristics of land? |
1. Immobility — substances of land are removable, but the parcel itself can’t change location 2. Indestructibility — even tho it’s subject to natural & human forces that may change its conditions, land can’t be destroyed • permanence in land & the long-term nature of most improvements tend to stabilize investments in real property • improvements on land decorticate & may become obsolete, which can dramatically reduce land’s value 3. Uniqueness — the concept that no two parcels are exactly the same or in the same location • a.k.a. Non-homogenity |
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Real estate |
Land plus all human-made improvements that are permanently attached (annexed) to it |
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Improvement |
Any artificial thing attached on it below ground, such as: • fence • waterline or sewer pipe • landscape |
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Real property |
Interests, benefits, & rights that are automatically included in real estate ownership |
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Are real estate & real property synonymous? |
Only in some states & they’re referred to as both the physical properties & the rights |
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Bundle of legal rights |
The concept of land ownership & legal rights to the land |
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List rights included in the bundle |
• right to possession • right to control property lawfully • right to enjoyment lawfully • right of exclusion (keep others from entering) • right of disposition (sell, will, transfer, or otherwise expose or encumber property) |
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Title |
Refers to the ownership of property |
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Deed |
The document by which the title is transferred |
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Apputenance |
A right or privilege associated with property, although not necessarily physical |
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Examples of appurtenance include: |
• parking spaces in a multi unit building • easements • water rights |
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Does an appurtenance transfer to new owner? |
Yes |
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Subsurface rights |
Rights to the earth’s natural resources below the surface |
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Surface rights |
Ownership rights in a parcel that are limited to the earth’s surface |
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What is unique about transferring subsurface & surface rights? |
Many owners transfer subsurface rights w/o transferring surface rights & vice versa |
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Air rights |
Rights to use the space about the earth |
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Can air rights be sold? |
Yes. They may be sold or leased independently, given it isn’t limited by law. • rights over railroad tracks must be purchased or leased to construct buildings • developers must also purchase numerous small portions of land’s surface for the building’s foundation supports *** STATE & LOCALLY REGULATED |
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Water rights |
Common law or statutory rights held by owners of lands adjacent to rivers, lakes, or oceans & the restrictions on the rights of land ownership *** LAWS VARY BY BY STATE, CLIMATE, & TOPOGRAPHY |
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What areas of the country are strict about water rights? |
• western states where water is typically scarce & more valuable • agricultural area • population centers |
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What are the two types of water rights? |
1. Riparian laws 2. Littoral rights |
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Riparian laws |
Common-law rights granted to owners of land along the course of a river, stream, or similar |
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List some restrictions of the riparian laws? |
• cannot interrupt or alter the flow of water • cannot contaminate water • an owner of land that borders unnavigable water owns the land under the water to the exact center of the waterway • navigable waters are considered public highways |
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Littoral rights |
Rights of owners whose land borders commercially owned lakes, seas, & oceans |
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List restrictions of the littoral rights |
• land that’s owned adjacent to commercially navigable rivers is owned to water’s edge • state owns title to submerged land • all land below the high-water mark is owned by the government |
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How do plentiful water & scare water affect water rights? |
• plentiful water = common law doctrines • scarce water = state control & limited domestic use |
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Are riparian & littoral rights appurtenant in every state? |
They aren’t appurtenant in every state & rights cannot be obtained by a former owner after land is sold. |
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Accretion |
When land is affect by the natural action of water |
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How does accretion affect land owners? |
Owners are entitled to any land increase that results from accretion. |
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Erosion |
The gradual & sometimes imperceptible wearing away of land by natural forces, such as wind, rain, & flowing water |
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Avulsion |
Sudden removal of soil by an act of nature |
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How can avulsion affect parcels? |
Parcels can become smaller due to avulsion |
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Prior appropriation |
In states where water is scarce, ownership & use of water is determined by this doctrine |
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List some points of prior appropriation. |
• controlled by the state • to secure water rights, a land owner must demonstrate beneficial plans • priority of rights is typically determined by oldest recorded permit date • in some states, the permit holder may sell water right; however, issuance of water permit doesn’t grant access to the water source because all rights must be obtained by property owner |
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Does prior appropriation have any exceptions? |
Yes. Limited domestic water use is not controlled by the state. |
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Coastal waters |
Okay |
