The Business of Real Estate

Question 1

Major divisions of real estate business

Answer 1

• brokerages
• property development
• property management
• property appraising

Question 2

Business brokers

Answer 2

Brokers who sell businesses and are required to have a real estate license

Question 3

Financing/Investment Firms

Answer 3

Any individual firm that owns and/or invests in real estate for profit

Question 4

Mortgage brokers

Answer 4

The business of providing financing, loan processing, servicing or packaging

Question 5

Educators

Answer 5

Teachers of real estate concepts

Question 6

Urban planning

Answer 6

Process concerned with development/ design of land use for urban entitites

Question 7

Government divisions

Answer 7

Entities such as EPA or Forest Services affecting real estate business

Question 8

Escrow Services

Answer 8

Organizations that fulfill escrow instructions and handle transaction closings

Question 9

Title companies

Answer 9

Organizations that analyze title to property and issue title insurance

Question 10

Brokerages

Answer 10

Function to bring buyers and sellers together for real estate transactions, charging a fee called commission

Question 11

Brokerage specializations

Answer 11

• residential
• business
• commercial
• industrial
• farm or agricultural properties
• property management
• leasing
• exchanging

Question 12

Real Estate Brokerages

Answer 12

• a company also referred to as the Entity and the Employing Broker
• must obtain entity license from department of real estate

Question 13

Error and Omissions

Answer 13

Insurance that covers the company and agents form lawsuits for any error or omission that took place in a transaction

Question 14

Liability Insurance

Answer 14

General insurance policy that would cover customer injuries, customer property damage

Question 15

Umbrella policy

Answer 15

Extended coverage where primary liability policy limits end

Question 16

Real estate brokerage can be organized as one of these three types of business entities …

Answer 16

• Partnership
• Corporation
• Limited Liability Company (LLC)

Question 17

Partnership

Answer 17

Partnership with a managing general partner who is licensed as the designated broker

Question 18

Corporation

Answer 18

A lawfully organized corporation that is registered with the Arizona Corporation Commission and that has an officer licensed as the designated broker

Question 19

Limited Liability Company

Answer 19

A lawfully organized liability company that has a member or manager licensed as the designated broker

Question 20

Broker Licenses

Answer 20

• Designated broker
• Managing broker
• Associate broker

Question 21

Designated broker

Answer 21

Licensed as a broker and designated to act on behalf of employing brokerage (entity)

Question 22

Managing broker

Answer 22

Appointed by designated broker to assist with daily functions

Question 23

Associate broker

Answer 23

Supervised by designated broker, can be hired as designated broker

Question 24

Subdividers

Answer 24

Individual or entity that takes raw land and does planning for its best use

Question 25

Land developers

Answer 25

Improve lots by adding buildings, employ architects and builders

Question 26

Property Managment

Answer 26

The special management for income properties such as apartment complexes, condominiums, and commercial buildings

Question 27

Appraising

Answer 27

Appraisers can work for county assessors, banks, or government

Question 28

Independent Contractor

Answer 28

Must be licensed must receive all income as commissions and must posses written contract outlining status

Question 29

Commission

Answer 29

All commissions negotiated, no industry standard. Typically a percentage of the sales price, but could be a flat fee

Question 30

Commission sharing brokerage

Answer 30

Agent is paid a percentage of total commission

Question 31

100 Percent brokerage

Answer 31

A salesperson earns 100% of the commission minus a flat fee owed to the broker. Also required to pay a monthly office fee, and will have to pay business expenses