Chapter 1: Introduction to the Real Estate Business

Question 1

Brokerage

Answer 1

business of bringing people together in a real estate transaction

Question 2

Broker

Answer 2

a person or company licensed to buy, sell, exchange, or lease real property for others and to charge a fee for their services (acts as a point of contact between two or more people in negotiating the sale, purchase, or rental of property)

Question 3

Salesperson

Answer 3

employed/associated with broker to perform brokerage activities on behalf or for the broker (also known as sales associate or associate licensee)

Question 4

Real Estate Licensee

Answer 4

a person who has satisfied the requirements of a licensing agency, as authorized by state legislation

Question 5

Appraisal

Answer 5

a person who establishes value on a home based on established methods and the appraiser’s professional judgment (we only do a CMA “comparative market analysis”)

Question 6

Property Manager

Answer 6

a person or company hired to maintain and manage property on behalf of the property owner (salary/hourly, lease up agent, property manager)

Question 7

Financing

Answer 7

business of providing the funds that make real estate sales transactions possible (mortgage professionals)

Question 8

Subdivision and Development

Answer 8

subdivision-dividing of a single property into smaller parcels
development-involves construction of improvements that benefit the land

Question 9

Home Inspection

Answer 9

a profession that combines a practitioner’s interest in real estate with skills and training in the construction trades (in CT credit the buyer $500 at closing if they don’t fill out form that discloses house conditions)

Question 10

Counseling

Answer 10

clients rely on you for everything, give them sound advice and judgment but establish boundaries and refer them to other people. furnish clients with the information needed to make informed decisions

Question 11

Residential Property

Answer 11

single/multi family

Question 12

Commercial Property

Answer 12

business space

Question 13

Mixed-Use Property

Answer 13

commercial + residential in same building

Question 14

Industrial Property

Answer 14

warehouses, factories, power plant

Question 15

Agricultural Property

Answer 15

farms, wineries, orchards, ranches, etc

Question 16

Special Purpose Property

Answer 16

church, temple, schools, municipal service buildings, privately owned or publicly held

Question 17

Condominium

Answer 17

own house, share common deed areas (conventional ownership; deed)

Question 18

Cooperative (Co-Op)

Answer 18

share holder (personal property) (proprietary lease)

Question 19

Planned Unit Development (PUD)

Answer 19

(couple or master plan) a planned combination of diverse land uses, such as housing, recreation, and shopping, in one contained development or subdivision

Question 20

Mixed-Use Development (MUD)

Answer 20

(highrise developments) combine office space, stores, theaters, and apartment units into a single vertical community

Question 21

Converted-Use Properties

Answer 21

factories, warehouses, office buildings, hotels, schools, churches, and other structures that have been converted to residential use

Question 22

Factory-Built Housing

Answer 22

Manufactured Homes/Modular Homes

Question 23

Fair Housing

Answer 23

federal law prohibits discrimination in the provision of housing and housing-related services (including lending) based on an individual’s race, color, national origin, religion, sex, familial status, or disability

not about intention, very serious, first fine $20,000

Question 24

Market

Answer 24

a place where goods can be bought and sold (cyclical, it changes)

Question 25

Supply and Demand

Answer 25

this operation establishes prices for goods and services in the market supply increases, demand remains stable, prices go down demand increases, supply remains stable, prices go up

Question 26

Supply

Answer 26

quantity of goods or services that can be sold at a given price

Question 27

Demand

Answer 27

quantity of goods or services that consumers are willing and able to buy at a given price

Question 28

Uniqueness

Answer 28

no matter how identical two parcels appear they aren't exactly the same, each occupies its own unique geographic location

Question 29

Immobility

Answer 29

refers to the fact that property/land cannot be moved

Question 30

Factors Affecting Supply

Answer 30

- labor force, construction, material costs - government controls and monetary policy-the Fed (Federal Reserve Board) establishes a discount rate of interest for the money it lends to commercial banks. that discount rate has a direct impact on the interest rates the bank charge to borrowers, which in turn plays a significant role in people's ability to buy homes. - local government factors (land-use controls, building codes, and zoning)

Question 31

Factors Affecting Demand

Answer 31

- population - demographics (families, ages, etc) - employment and wage levels (businesses moving in and out, ex: Amazon coming to Long Island but deal didn't go through)

Question 32

Niche Marketing

Answer 32

target marketing of specific demographic populations fair housing prohibits this because it gears homes to certain people which is discriminatory

Question 33

Equity (financial considerations of a homeowner)

Answer 33

difference between market value and the amount still owed on the property

Question 34

Tax Deductions (financial considerations of a homeowner)

Answer 34

homeowners can get these based on mortgage interest paid

Question 35

Other tax benefits (financial considerations of a homeowner)

Answer 35

- 1st time home buyer - (firefighters, veterans, teacher, etc...) - Tax credits - Investment properties

Question 36

Advantages of Real Estate Investment | Rate of Return

Answer 36

over time a real estate investment typically shows an above-average (or even high) rate of return (10 to 20 years, or more)

Question 37

Advantages of Real Estate Investment | Control

Answer 37

more immediate advantages, offers investors more control over their investments unlike stocks, bonds, or other insecurities

Question 38

Advantages of Real Estate Investment | Appreciation

Answer 38

an increase in value

Question 39

Advantages of Real Estate Investment | Equity Buildup

Answer 39

as it appreciates the value increases which includes the portion of the loan that has been paid off

Question 40

Advantages of Real Estate Investment | Leverage

Answer 40

the use of borrowed money to finance an investment

Question 41

Advantages of Real Estate Investment | Depreciation

Answer 41

in real estate investment-allows an investor to recover the cost of an income-producing asset through tax deductions over the asset's useful life (also known as cost recovery)

Question 42

Advantages of Real Estate Investment | Capital Gain

Answer 42

the difference between the purchase price of a property and its net selling price