Chapter 1: The Real Estate Business Flashcards Preview

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Flashcards in Chapter 1: The Real Estate Business Deck (38)
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1
Q

The real estate market is

A

Local in nature

2
Q

Farming

A

Licensees will concentrate on one type of property or on one particular neighborhood.

3
Q

Farming area or target market

A

Finding and specializing in a particular neighborhood or type of property, this is considered to be one of the best ways to succeed in residential sales.

4
Q

real estate brokerage

A

is a business in which real estate-related activities are performed under the authority of a licensed real estate broker

5
Q

Broker

A

acts as an agent of intermediary between two or more people in the negotiation of the sale, purchase, or rental of real estate.

6
Q

Sales Associate

A

works for the broker, providing services to prospective buyers and sellers on behalf of the broker.

7
Q

Licensee

A

whether a sales associate or broker, is a person who has met the requirements of law and is licensed and permitted to perform specified services to members of the public in connection with real property transactions.

8
Q

Property Transfer

A

There are laws, documents, disclosures, and technicalities that can be bewildering. Deeds, mortgages, surveys, appraisals, contracts, title insurance, flood plains, zoning and building codes, and finance.

9
Q

Valuation and Comparative Market Analysis (CMA)

A

Real estate licensees prepare a cma, which is a value estimate based on recent sales of similar properties in the same neighborhood. It uses many concepts that an appraisal does but may not be referred to as an appraisal.

10
Q

Valuation and Broker Price Opinion (BPO)

A

a lender may hire a real estate professional to preform a BPO in a short sale transaction to help determine the selling price of the property since the licensee typically has knowledge of the local market. The licensee will be asked to take photos of the property and complete a BPO report form provided by the lender. The report includes a neighborhood analysis of comparable properties along with local and regional market information. BPOs are less thorough than an appraisal but require more analysis than a basic CMA.

11
Q

Marketing and the MLS

A

The multiple listing service (MLS) system provides an extensive marketing tool for real estate licensees. It provides the opportunity to market listings to thousands of other local and statewide licensees in addition to potential buyers around the world.

12
Q

Customer Follow-up

A

Consistent and repeated follow-up with customers is key in maintaining good relationships and obtaining new prospects. Twice a year, with such things as a note or postcard on the anniversary of their purchase.

13
Q

Residential Transaction

A
  • The sale of any improved residential property of four units or fewer
  • Unimproved property intended for four units or fewer,
  • Agricultural properties of ten acres or less,
  • Leases with options to purchase all or a portion of improved property of four or fewer residential units, and
  • Dispositions of business interests involving property of four or fewer residential units
14
Q

Agricultural Sales

A

Large tracts of land and significant sums of money. Brokers involved in these sales must be able to analyze the profitability of current agricultural uses and estimate the potential of properties under consideration.

15
Q

Commercial Sales or Leasing

A

Licensees must be capable of analyzing the past and future potential income derived from investment property. Potential commercial properties that an investor might consider include apartment buildings, office buildings, and shopping centers. Commercial real estate brokers must also have a basic knowledge of tax laws that affect income earned from commercial property as well as the tax consequences of buying and selling investment property.

16
Q

Industrial Sales or Leasing

A

industrial properties include warehouses and manufacturing facilities. Industrial sales involve users/owners, rather than investors. Industrial real estate brokers seek to locate properties that meet the future owner’s requirements. Knowledge concerning government regulations of land use, environmental considerations, transportation, labor costs, and utility charges are all important.

17
Q

Business Brokerage

A

A broker who specializes in the listing and sale of businesses, referred to as business opportunities, must be able to estimate the value of a business being offered for sale or purchase.

18
Q

Going Concern Value

A

the value of a business, includes its income, tangible and intangible assets, and goodwill, in addition to the value of the real property.

19
Q

Absentee Owners

A

Owners who buy income property as investments and depend on professionals to manage them. This has grown over the years and has become a major service offered by real estate professionals.

20
Q

Property Management

A

differs from simply being a rental agent. A rental agent finds tenants for properties and collects a fee for the service but does not manage the property once the tenant has been located. Property managers locate tenants, collect rents, handle payments of taxes, insurance, and other operation expenses. Property managers do not write or prepare leases, but they may assist prospective tenants in completing attorney-prepared leases.

21
Q

Community Association Management (CAM)

A

a CAM license is required when the community association employs a property manager who receives compensation for certain management services, and the community association served contains more than 10 units or has an annual budget in excess of $100,000.

22
Q

Appraising

A

is the process of developing an opinion of value of real property. An appraiser conducts an independent, impartial, and objective analysis based on research and data pertaining to the value of the specified real property. Appraisal fees are based on the time, effort, and expense involved for completion of the assignment, not on the value of the property.

23
Q

Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA)

A

legislation passed by congress designed to correct many of the problems discovered during the hearings into the collapse of lending institutions in the United States.

24
Q

Uniform Standards of Professional Appraisal Practice (USPAP)

A

was developed by the Appraisal Foundation, made up primarily of national appraisal organizations and educators as a standardized method by which appraisals should be prepared and reported.

25
Q

Financing

A

Borrowed money is the lifeblood of the real estate business. Understand the various sources of financial assistance available to borrowers. Knowledge of the practices of various lending institutions, the availability and cost of credit, and the requirements borrowers must meet to qualify for various financing plans is necessary. Mortgage loans can be obtained through mortgage companies, commercial banks, savings and loans, credit unions, life insurance companies, trusts, and even individuals.

26
Q

Mortgage Loan Originators (MLOs)

A

are individuals or businesses that arrange loans between lenders and borrowers; although they do not make loans, mortgage loan originators are an important source of funds as well. They must have a separate license issued by the Florida Department of Financial Services (FDFS).

27
Q

Property Insurance

A

desirable and mandatory in many instances. Many real estate offices offer home warranty programs. Lenders usually require homeowner’s insurance as a condition of a loan.

28
Q

Construction- 3 general phases of development and construction

A
  • Land acquisition
  • Subdividing and development and,
  • Recording of the subdivision plat map
29
Q

Types of residential construction

A

Custom building
Speculative building
Tract building

30
Q

Custom Building

A

is when a contractor is employed to build a structure according to the customer’s specifications

31
Q

Speculative building

A

is when a contractor builds a structure before securing a buyer with the hope of selling the finished structure. This is also referred to as building on spec.

32
Q

Tract building

A

is when a developer acquires a large tract of land, records a subdivision plat map, and uses a model center from which sales may be made.

33
Q

National Association of REALTORS (NAR)

A

the nation’s largest trade and professional association, with a goal of preserving the right of individuals to own real property through an exchange of information.
Members must agree to abide by a strict Code of Ethics and provide optimum service to the public. The term REALTOR is a registered trademark of the NAR and may be used only by those who are members of the organization

34
Q

Florida Association of REALTORS (FAR)

A

The largest trade association in the state. FAR does all its business as Florida REALTORS. Members can take advantage of benefits such as business contacts, networking opportunities, educational offerings, research and legislation representation, discount programs, online forms, and technology services.

35
Q

Local Association of REALTORS

A

many licensees join local boards or associations of REALTORS. Joining a local association also gives the licensee membership in FAR, as well as NAR. If a broker is a member, all sales associates must also join.

36
Q

Local Government

A
  • planning and zoning, property taxation, building and health code regulations are controlled by local governments. Local government bodies can also impose a moratorium or temporary delay for a building project.
37
Q

State Government

A

at the state level, real estate development is impacted by the following:
• Developments of Regional Impact (DRI)
• Department of Environmental Protection (DEP)
• Department of Economic Opportunity (DEO)
Roads, waterways, and other factors that affect multiple political jurisdictions are impacted at the state level.

38
Q

Federal Government

A

legislation that affects the operation of lending institutions has had an enormous effect on the real estate profession. Monetary policy adopted by the Federal Reserve System has a daily influence on the construction and real estate industries.