Chapter 1 Introduction to the Real Estate Business

The real estate business is more than just houses. As this chapter says, Real estate is big business, and includes commercial properties, condominiums, and open land in addition to single-family homes.

Introduction to the Real Estate Business

Learning Objectives

Identify the various careers available in real estate, and the professional organizations that support them Describe the five categories of real property Explain the operation of supply and demand in the real estate market Distinguish the economic, political and social factors that influence supply and demand

Modern Real Estate Practice

17th Edition

Introduction to the Real Estate Business

A Business of Many Specializations

Brokerage Appraisal Property management Financing Subdivision and development Home inspection Counseling Education
Modern Real Estate Practice
17th Edition

Introduction to the Real Estate Business

Types of Real Property

Residential Commercial Industrial Agricultural Special Purpose

Modern Real Estate Practice

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Introduction to the Real Estate Business

The Real Estate Market

Supply and Demand Factors Affecting Supply Factors Affecting Demand

Modern Real Estate Practice

17th Edition

Chapter 2 Real Property and the Law

Many types of property define real estates product. Land is one of the fundamental concepts of real estate, as well as improvements in the form of houses and outbuildings. The fence suggests the limits of ownership.

Real Property and the Law

Learning Objectives

Identify the rights that convey with ownership of real property and the characteristics of real estate Describe the difference between real and personal property, and the various types of personalty Explain the types of laws that affect real estate Distinguish among the concepts of land, real estate and real property

Modern Real Estate Practice

17th Edition

Real Property and the Law

Land - The earths surface extending downward to

the center of the earth and upward to infinity, including permanent natural objects

Real Estate - Land at, above and below the

earths surface, plus all things permanently attached to it, whether natural or artificial

Real Property - The interests, benefits and rights

that are automatically included in the ownership of land and real estate

Modern Real Estate Practice

17th Edition

Real Property and the Law

Modern Real Estate Practice

17th Edition

Real Property and the Law

Bundle of Legal Rights

Modern Real Estate Practice

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Real Property and the Law

Real Property Rights

Surface Rights Subsurface Rights Air Rights Water Rights

Modern Real Estate Practice

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Real Property and the Law

Personal Property

All property that does not fit the definition of real property

Manufactured Housing Plants Fixtures Intent Method of annexation Adaptation to real estate Agreement Trade Fixtures
Modern Real Estate Practice
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Real Property and the Law

Characteristics of Real Property

Economic Characteristics
Scarcity Improvements Permanence of investment Location

Physical Characteristics
Immobility Indestructibility Uniqueness
Modern Real Estate Practice
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Real Property and the Law

Laws Affecting Real Estate

Contract law General property law Agency law Real estate license law Federal regulations Federal, state and local tax laws Zoning and land use laws Federal, state and local environmental regulations
Modern Real Estate Practice
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Chapter 3 Concepts of Home Ownership

A variety of housing types are available under the general heading of home ownership: single family, small multifamily residences, and high-rise condos.

Concepts of Home Ownership

Learning Objectives

Identify the various types of housing choices available to home buyers Describe the issues involved in making a home ownership decision Explain the tax benefits of home ownership and the provisions of recent changes to the Tax Code Distinguish the various types of homeowners insurance policy coverage

Modern Real Estate Practice

17th Edition

Concepts of Home Ownership

Types of Housing

Apartment Complex Condominium Cooperative Planned Unit Development (PUD) Retirement Community

Modern Real Estate Practice

17th Edition

Concepts of Home Ownership

Types of Housing

Highrise Development Converted-use Property Manufactured Housing Modular Homes Time-share

Modern Real Estate Practice

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Concepts of Home Ownership

Housing Affordability

Mortgage Terms Ownership Expenses and Ability to Pay Investment Considerations Tax Benefits

Modern Real Estate Practice

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Concepts of Home Ownership

Homeowners Insurance
Coverage and Claims Basic vs. Broad-form Policies Liability Coinsurance Clause National Flood Insurance Program

Modern Real Estate Practice

17th Edition

Chapter 4 Agency

Real estate is an industry about property, but its also an industry about people. The concept of agency is entirely about people, and relationships between and among them.

Agency
Learning Objectives

Identify the various types of agency relationships common in the real estate profession and the characteristics of each Describe the fiduciary duties involved in an agency relationship Explain the process by which agency is created and terminated and the role of disclosure in agency relationships Distinguish the duties owed by an agent to his or her client from those owed to customers
Modern Real Estate Practice

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Agency

Modern Real Estate Practice

17th Edition

Agency

Modern Real Estate Practice

17th Edition

Agency
Real Estate Agency

Common-law history Definitions:

Agent Subagent Principal Agency Fiduciary Client Customer Nonagent

Modern Real Estate Practice

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Agency
Fiduciary Duties of an Agent

Care Obedience Loyalty Disclosure Accounting Confidentiality

Modern Real Estate Practice

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Agency

Creation and Termination of Agency

Creation

Termination
Completion, performance or fulfillment Death or incapacity Destruction or condemnation of the property Expiration Mutual agreement Breach Operation of law
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Express Agency Implied Agency

Modern Real Estate Practice

Agency
Limitations on Authority

Universal Agent Empowered to do anything the principal could do personally

General Agent Represents the principal in a broad range of matters related to a particular business or activity

Special Agent Authorized to represent the principal in one specific act or business transaction under detailed instructions

Modern Real Estate Practice

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Agency
Types of Agency Relationships

Single Agency Subagency Seller Representation Buyer Representation Owner as Principal

Modern Real Estate Practice

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Agency
Types of Agency Relationships
Dual Agency
Disclosed Dual Agency Designated Agency Undisclosed Dual Agency

Disclosure Laws Nonagency Agency Statutes

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17th Edition

Agency
Customer-Level Services

Reasonable care and skill in performance Honest and fair dealing Disclosure of all facts the licensee knows (or should be expected to know) that materially affect the value or desirability of the property State law may require additional services or disclosures

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Agency
Misrepresentation
Fraud: Intentional misrepresentation of a material fact to harm or take advantage of another Negligent Misrepresentation: Broker should have known a statement was false

Puffing
Exaggeration of a property's benefits

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Agency
Property Conditions

Latent Defect A hidden structural defect that would not be discovered by ordinary inspection Stigmatized Property Properties branded undesirable because of actual or rumored criminal, tragic or scandalous events that occurred on the property

Modern Real Estate Practice

17th Edition

Chapter 5 Real Estate Brokerage

A real estate brokerage is more than a room full of desks. Its a hive of activity, dependent on people, information, and technology to keep the business running.

Real Estate Brokerage

Learning Objectives

Identify the role of technologies, personnel and license laws in the operation of a real estate business Describe the various types of antitrust violations common in the real estate industry, and the penalties involved with each Explain how a brokers compensation is usually determined Distinguish employees from independent contractors and explain why the distinction is important
Modern Real Estate Practice
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Real Estate Brokerage

Brokerage

The business of bringing parties together.

Real Estate Broker

A person licensed to buy, sell, exchange or lease real property for others and to charge a fee for these services.

Modern Real Estate Practice

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Real Estate Brokerage

Broker-Salesperson Relationship

A real estate salesperson is licensed to perform real estate activities on behalf of a licensed real estate broker Employee broker may require employee to follow rules for hours, attendance, etc. Independent Contractor broker cannot require specific office hours, attendance, etc.

Modern Real Estate Practice

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Real Estate Brokerage

Technology

Computers and Laptops Internet, Web Sites, E-mail Cell Phones, Digital Cameras, PDAs Internet Advertising Security Electronic Contracting

Modern Real Estate Practice

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Real Estate Brokerage

Brokers Compensation

Commission is always negotiable Commission is usually earned when

a completed sales contract has been executed by a ready, willing and able buyer the contract is accepted and executed by the seller copies of the contract are in the possession of all parties

Modern Real Estate Practice

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Real Estate Brokerage

Brokers Compensation

Procuring cause
broker started a chain of events that resulted in a sale

Ready, willing and able buyer

one who is prepared to buy on the sellers terms and ready to take positive steps toward consummation of the transaction

Modern Real Estate Practice

17th Edition

Real Estate Brokerage

Salespersons Compensation

Amount and method of compensation is set by agreement between the broker and the salesperson

Fixed salary Share of commission 100% Commission Plan Graduated Commission Split

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Real Estate Brokerage

Modern Real Estate Practice

17th Edition

Real Estate Brokerage

Antitrust Laws

Price-fixing Group boycotting Allocation of customers or markets Tie-in agreements Penalties

Modern Real Estate Practice

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Real Estate Brokerage

Recent Issues

Fee-for-Services Minimum Level of Service Do-Not-Call Registry

Modern Real Estate Practice

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