Chapter 1 Flashcards
Brokerage
Bringing people together in a real estate transaction. A real estate licensee acts as a point of contact between two or more people in negotiating th sale, purchase, or rental of property.
Appraisal
The process of estimating a property’s market value based on established methods and the appraiser’s professional judgement. Most lenders require a professional appraisal by a licensed appraiser acompany loan package.
Property Management
A person or company hired to maintain and manage property on behalf of its owner.
Financing
The business of finding funds to make real estate transactions possible.
Most transactions are financed through mortgage loans or trust deed loans secured by property.
Subdivision
Is the splitting of a single property into smaller parcels. Development involves the construction of improvements on the land.
Home Inspection
Professional home inspectors conduct a thorough visual survey of a property’s structure, systems, and site conditions and prepare an analytical report that is valuable to homeowners and purchasers.
National Association of REALTORS (NAR)
The largest real estate organization. You must be a member of NAR to use the term REALTOR
Types of Real Property
Residential
Commercial
Industrial – warehouses, factories, power plants
Agriculture
Special Purpose – church, school, cemeteries
Supply and Demand
The forces of supply and demand impact the prices for goods and services.
When supply increases and demand remains stable, prices go down.
When demand increases and supply remains stable, prices go up.
Two characteristics that govern supply and demand in real estate:
- uniqueness: means that no matter how similar two parcels of real estate may appear, they are never exactly alike. Each property is in its own unique geographic location.
- Immobility: refers to the fact that property cannot be relocated to satisfy demand where supply is low.
What is land
The earth’s surface extending downward to the center of the earth and upward to infinity. Also includes soil.
Also the objects that are attached to the earth’s surface, such as boulders and plants.
Also, minerals and oil that lie way beneath the surface (subsurface)
Also includes the air above the earth, all the way into space (airspace)
What is real estate?
a piece of land plus any natual or artifical (man-made) improvements that are attached or have been added.
artifical examples: sidewalks, fences, buildings.
natural examples: trees, minerals, oil
Real Property
includes real estate and its bundle of rights
What is bundle of legal rights?
This is the legal rights of ownership that attach to ownership of a parcel of real estate. Legal bundle of rights include the following:
possession, control, enjoyment, exclusion, disposition (sell, convey, or gift the property).
PCEED
What is personal property?
Property that is movable. Examples, chairs, tables, money,bank accounts, bonds.
Personal property is also known as what?
Chattels and Personalty
What is a fixture?
It is personal property that has been affixed to the land or building. By law is becomes part of real property.
What is the legal test of a fixture?
This test is used to determine if it is personal property of a fixture.
- Method of attachment: How permanent is the method of attachment? Can the item be removed without causing damage to the property?
- Adaptation of real estate? Is the item being used as real property or personal property?
- Agreement between parties? (most important method) This is usually spelled out in the Sales Contract stating what goes and what stays. Have the parties agreed in writing?
Any item that the seller does not want included in the sales contract should be removed prior to viewing.
What is a trade fixture?
It is personal property of a business owner that when attached to a rented space or building, remains personal property.
Examples of trade fixtures
Bowling alleys, store shelves, bars, restaurant equipment.
When must trade fixtures be removed?
Trade fixtures must be removed on or before the last day the property is rented.
Is the tentant responsible for damages for removal of a trade fixture?
Yes, the tenant is responsible for any damage of removal of a trade fixture.
If a trade fixture is not removed, who obtains the rights to it?
The landlord.
What is location?
It is a economic characteristic of real estate. Also known as area preference or situs. Location does not deal directly with the geographic location of a property. Rather it deals more with the a person’s preference for a given area.
PREFERENTIAL LOCATION IS THE MOST IMPORTANT ECONOMIC CHARACTERISTIC OF LAND.
