Real Estate Chp 1

Front 1

Brokerage

Back 1

Bringing parties together in a real estate transaction.

Front 2

Appraisal

Back 2

Process of estimating market value of real estate.

Front 3

Counseling

Back 3

Provide independent advice to individuals and firms regarding the purchase and use of real estate investment. Need knowledge of tax laws, real estate, and investing.

Front 4

Education

Back 4

Instructions for both real estate practitioners and the General public.

Front 5

Property Development

Back 5

Divide larger parcels of lands and the construction of improvements such as roads and utilities.

Front 6

Urban Planning

Back 6

Typically work with local government making recommendations regarding new schools, parks, utilities, streets, and highways

Front 7

Property Inspectors

Back 7

Conduct thorough survey of a structure. It's mechanical, plumbing, and electrical systems and site conditions.

Front 8

National Association of Realtors (NAR)

Back 8

Largest and best known professional association in the RE industry. Worked to promote high standards of professionalism in the industry.

Front 9

REALTOR

Back 9

NAR trademark that can only be used by it's members.

Front 10

NAR Three Main Functions

Back 10

1. Sponsor several affiliated institutions and societies that offer educational and training programs

2. Takes positions on legislation affecting RE and provides testimony to congress and to government and regulatory agencies.

3. Established a code of ethics.

Front 11

Five Classes of RE

Back 11

Residential, commercial, industrial, agricultural, Special purpose RE

Front 12

Residential

Back 12

Single family residence, condo, cooperatives, apartments, duplexes, triplexes, town home, mobile homes, vacation homes, and retirement housing.

Front 13

Commercial

Back 13

Used for business including retail stores, shopping malls, office buildings, theatres, and parking lots.

Front 14

Industrial

Back 14

Factories, warehouse, and research and development facilities.

Front 15

Agricultural

Back 15

Farms, orchards, timberlands, ranches, and hatcheries.

Front 16

Special Purpose RE

Back 16

Churches, government land, hospitals, and schools.

Front 17

Physical Characteristics of RE

Back 17

Immobility, Indestructibility, Nonhomogeneity.

Front 18

Immobility

Back 18

A physical characteristic of RE. The geographic location of property always remains the same.

Front 19

Consequences of Immobility

Back 19

Location is important in determining value.

RE marketers are local and need to be familiar with the local market.

Land is easily regulated and taxed by the government.

Value is heavily influenced by changes in the surrounding area.

An exact legal description of the property's location, including definite reference points, is required when title to property is transferred.

Hint 19

Five reasons

Front 20

Indestructibility

Back 20

A physical characteristic of RE. Also called durability. Land cannot be destroyed or worn out. Appearance may be altered but it continues to exist.

Front 21

Effects of Indestructibility

Back 21

1. RE investments are realitively durable and long term.

2. Land cannot depreciate because it does not wear out.

3. Land is not insured by property insurance because it cannot be destroyed.

Front 22

Nonhomogeneity

Back 22

A physical characteristic of RE. No parcels of RE are exactly alike. Differences can be minerals, location, size and shape, etc.

Front 23

Characteristics of Homogeneity

Back 23

1. Lack of standardization means RE professionals must work really hard to match a property to a buyer's needs.

2. Because each parcel is different, it takes buyers longer to purchase and select.

3. Cannot substitute money or another piece of land. Term is nonfungible.

Hint 23

Three characteristics

Front 24

Economic Characteristics of RE

Back 24

Scarcity, modifications, permanence of investments, and area preference.

Hint 24

Four characteristics

Front 25

Scarcity

Back 25

An economic characteristic of RE

Hint 25

Supply of RE is limited. There frequently is not enough in certain popular areas to meet demand. A fixed supply is aka inelastic.

Front 26

Consequence of Scarcity (Inelastic)

Back 26

Strong demand in an area will increase property values.

Front 27

Modification

Back 27

An economic characteristic of RE. Also called inprovements. States that changes in a parcel of land affects its value.

Front 28

Permanence of Investment

Back 28

An economic characteristic of RE. Aka fixity. Means investments in RE are long term. Primarily due to physical characteristics of immobility and Indestructibility.

Front 29

Area Preference

Back 29

An economic characteristic of RE. Aka situs or location. Refers to people's preference to certain areas. Considered the most important economic characteristic.

Front 30

Consequences of Area Preference

Back 30

1. Buyers will attach great importance to the surrounding area when making their decision and determining how much to pay.

2. Preference for certain areas will affect the amount people are willing to pay and therefore the value of the property.

Front 31

Supply and Demand

Back 31

Interact to affect property prices

Front 32

Sellers market

Back 32

Price increases when demand increases or supply decreases.

Front 33

Buyers market

Back 33

Price decreases when demands decreases or supply increases.

Front 34

Market Segmentation

Back 34

Several different markets may operate in the same area. Can occur by type of property and the price range.

Front 35

Market Adjustments

Back 35

The speed at which prices respond is determined by the standardization and mobility of the product. RE is non-standard and non mobile so it is show to adjust.

Front 36

Factors Affecting Supply of RE

Back 36

1. Supply of labor and construction materials.

2. Government controls.

3. Government financial policy.

Front 37

Supply of Labor and Construction Materials.

Back 37

A factor affecting supply. The availability of skilled labor and material will affect the supply of buildings that can be built.

Front 38

Government Control

Back 38

A factor that affects supply. Affect supply through regulatory control. Controls can affect how Mich money is available fire RE construction loans. Local government controls RE through zoning and building ordinances.

Front 39

Government Financial Policy

Back 39

Factors affecting supply. The supply and cost of financing (interest rate) are important factors in determining the quantity and timing of new additions to the RE supply.

Front 40

Factors Affecting Demands of RE

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1. Population and demographic.

2. Employment and wage levels.

3. Vacancy levels.

Front 41

Population and Demographic

Back 41

A factor affecting demand. If population increases so does demands. Demographic affects not only the total demands for RE but also the type of housing demanded.

Front 42

Employment and Wage Levels

Back 42

A factor affecting demand. Directly affect people's ability to pay die RE.

Front 43

Vacancy Level

Back 43

A factor affecting demand. A vacancy rate is the percentage of all units not occupied. It is an indication of the dense for property in the area.