Chapter 1 : The Real Estate Industry

Question 1

Importance of Real Estate:

Answer 1

On vacant land, City planners, engineers, and local concerns may be involved from the beginning.

Then there’s the general contractor, who takes out a construction loan, orders materials, and hires sub-contractors to grade the land, lay the foundation, and add framing.

Major systems are added, like electricity, HVAC, plumbing. These all involve specialized contractors.

Once the work is complete, it’s inspected and given the final permit for occupancy.

Question 2

Real Estate professionals:

Answer 2

are needed to list the property and represent the buyers.

Buyers then keep lenders, title companies, appraisers, and home inspectors busy.

Question 3

In the process of moving, movers are required.

Answer 3

Often new furnishings, appliances, landscaping and décor are purchased

New owners may install security systems, and set up subscriptions to mail, newspaper, cable.

The new owners then frequent local gas stations, stores, and restaurants.

Their children attend schools, take part in sports and other recreational activities.

And it all started with land.

Question 4

Top ten issues affecting Real Estate:

Answer 4

• Infrastructure
• Housing in America
• Weather and climate - related risks
• Technology
• The economy
• Politics
• Capital market risk
• Population migration
• Volatility and confidence
• Public and private indebtedness

Question 5

Infrastructure:

Answer 5

Economic growth (and real estate values) depend upon a healthy infrastructure (e.g buildings, roads, power supplies)

Question 6

Housing :

Answer 6

Inability to find an affordable place to live.

Even harder for sellers to find buyers who can afford the properties (affects retirees)

Question 7

Weather and Climate -Related risks

Answer 7

Acute (hurricane . flooding, wildfires, etc.)

Chronic (sea level rising, drought, heart waves. water scarcity).

Question 8

Technology

Answer 8

• ecommerce on supply chains (automated vehicles)
• Warehouse space demand (robotics)
• Delivery of medical services (seniors housing and medical office )
• Data proliferation (data centers)
• Property security and marketing (al sectors )

Question 9

Politics :

Answer 9

Political division leads to political gridlock which limits the ability of federal, state, and local governments to solve other problems on the list (climate change, population migration, infrastructure, and housing).

Question 10

Capital Market Risk:

Answer 10

In 2019, there was more capital available thran deals to pursue.

Question 11

Population Migration:

Answer 11

Population has shifted from the center of the country to the west and the south. Population moves in search of prosperity (a function of innovation)

Question 12

Volatility(changing rapidly and unpredictably, especially for the worse ) and Confidence :

Answer 12

Typically high preceding recessions; has faltered in 2020

Question 13

Private and Private Indebtedness :

Answer 13

depends upon the availability of reasonably priced capital.

Rising interest rates negatively affect real estate

Consumer debt burden (education and auto loans ) means borrowers have less credit available to them.

Question 14

Sales Associate:

Answer 14

Has a sales associates license and must work with a broker

Conducts brokerage activities on behalf of the broker for a fee or commission.

Must receive compensation through the broker

May be an employee or an independent contractor

Question 15

Broker:

Answer 15

Has a broker’s license

Conducts brokerage activities

Can receive compensation directly from buyers or sellers

Responsible for all the acts of all licensees who work under them.

Question 16

Residential: (homes that you purchase) (41%)

Answer 16

Property with four or fewer units or agricultural property with 10 or fewer acres

Question 17

Commercial: (income - producing) (26.7%)

Answer 17

properties such as retail stores, office buildings, shopping centers, and residential property of more than four units.

Question 18

Industrial: (7.4%)

Answer 18

Factories, warehouses, industrial districts

Question 19

Agricultural: (farming) (8.2%

Answer 19

Farms, timberland, ranches, orchards, etc.

Question 20

Businesses: (companies) (16.8%)

Answer 20

Sale, purchase, or lease of businesses.

Question 21

What else can you do in the real estate industry? :

Answer 21

Home Inspector: 
Real Estate Educator: 
Urban Planner: 
Title and Abstract Company:
Property Manager: 
Appraiser:
Lender or Investor:
Real Estate Counselor: 
Developer:

Question 22

Home Inspector:

Answer 22

Provides visual inspection of a property structure, systems, and site conditions and provides report to the buyer

Question 23

Real Estate Educator:

Answer 23

Educates on laws, rules, practices in the areas of pre-licensing, continuing education, and post licensing.

Question 24

Urban planner:

Answer 24

Makes recommendations to local governments for improvements

Question 25

Title and Abstract Company:

Answer 25

Ensures good title to the buyer in a real estate transaction

Question 26

Property Manager:

Answer 26

Operates properties for others

Question 27

Appraiser:

Answer 27

Estimates property values based on established valuation guidelines

Question 28

Lender or investor:

Answer 28

Provides funds for development and purchase of real estate

Question 29

Real Estate counselor :

Answer 29

Assists clients in making informed real estate decisions

Question 30

Developer:

Answer 30

Constructs improvements on land.

Question 31

Property Managers (PM’s)

Answer 31

Oversee day to day operations for various property types. They may oversee single - family houses to large apartment complexes.

Question 32

Property Managers (PM’s)

Answer 32

Property Manager’s main goal is to oversee properties to make sure the owner gets the best return rate on rental properties.

They do this by getting quality tenants in at good rental rates, and they also help to minimize expenses keeping the property maintained and upgraded as needed to maximize potential profits. They also provide monthly reports to owners that show rents received, expenses paid, repairs made, and the like.

Question 33

Property Manager Jobs include:

Answer 33

Keep the property maintained to attract quality tenants (inspecting during move ins and outs, making recommends on repairs, and improvements. )

Question 34

Property Manager Jobs include:

Answer 34

Finding and screening quality tenants - Sometimes there aren’t enough qualified tenants, and they have to take risk and take a chance on a less qualified tenants and

Question 35

Property Manager Jobs include:

Answer 35

Show the property to prospective renters. They are also required to disclose any questions and answers truthfully.

Question 36

Property Manager Jobs include: +66

Answer 36

Manage move ins and outs:

It should cover things like the deposit, first months’ rent, identification, and so on and so forth.

There will need to be any notations of anything that needs to be taken care of or repaired.

After submitting a 30 day written notice, they will have to coordinate to make sure there isn’t any new damage.

Question 37

Property Manager Jobs include:

Answer 37

Address tenant complaints:

Whether it’s due to a leaky faucet, to a noisy neighbor it must be handled quickly and efficient.

Question 38

Property Manager Jobs include:

Answer 38

Conduct market analyses:

For prospective clients who want to know how much their property is worth.

They will also keep tracking of the competitor pricing within the area, and will notify the property owners of changes in pricing in the market.

Question 39

Property Manager Jobs include:

Answer 39

PMs need to cultivate working relationships with tenants, vendors, and contractors that can be counted on, and also team with members who will be there to back the property manager up.

Question 40

Property Manager Jobs include:

Answer 40

A successful property manager will also need a litany of skills, including a lot of stamina, leadership skills, accounting skills, and most important, people skills, like the ability to listen, hear their problems, and help talk it through. And, of course, a leader is only as good as the team

Question 41

Real Estate Appraising:

Answer 41

Who needs to determine the market value of the property that will act as security for the buyer’s loan.

• Has to be done by someone who is state-certified, which are regulated by the Florida Real Estate Appraisal Board.

Question 42

Appraisal:

Answer 42

An opinion or estimate of a property’s value found for a specific purpose, for a specific person, as of a specific date, and based on proven facts.

Question 43

Appraisal:

Answer 43

Real estate licensees may appraise real property provided they do not represent themselves as state-certified, registered or licensed appraisers.

Question 44

USPAP

Answer 44

Uniform Standards of Professional Appraisal Practice.

Question 45

USPAP Process:

Answer 45

1) . State the problem - What’s the problem of the appraisal/ what is the appraisal trying to solve?
2) . Identity Data needed - What kind of problem needs solving? Is it commercial, residential, multi-family, single-family, condo, or detached? Is it old or new?
3) . Gather and analyze data - gather general data ( economy, city, neighborhood, demographics, income level, employers moving in and out, employment figures, cost of living, growing or shrinking population/ etc.

Specific data - subject property, the site, positioning on the site, improvements.

Question 46

USPAP Process:

Answer 46

4) . Determine highest and best use (if there wasn’t a building, what could be in it’s place) If there’s a warehouse, what if it could become a condominium complex ?
5) . Estimate the value of the land - What would be the price of the land if it was vacant?
6) . Use three approaches to estimate the value of the property

The sales comparison approach,
The cost approach
and the income approach.

7).

Question 47

USPAP Process:

Answer 47

7). Reconcile values to determine the appraisal value :

Takes the time to estimate the