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The real estate business is more than just houses. As this chapter says, “Real estate is big business,” and includes commercial properties, condominiums,

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Presentation on theme: "The real estate business is more than just houses. As this chapter says, “Real estate is big business,” and includes commercial properties, condominiums,"— Presentation transcript:

1 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. Chapter 1 Introduction to the Real Estate Business

2 1 Introduction to the Real Estate Business Modern Real Estate Practice 17th Edition Learning Objectives ê Identify the various careers available in real estate, and the professional organizations that support them ê Describe the five categories of real property ê Explain the operation of supply and demand in the real estate market ê Distinguish the economic, political and social factors that influence supply and demand

3 1 Introduction to the Real Estate Business Modern Real Estate Practice 17th Edition A Business of Many Specializations ê Brokerage ê Appraisal ê Property management ê Financing ê Subdivision and development ê Home inspection ê Counseling ê Education

4 1 Introduction to the Real Estate Business Modern Real Estate Practice 17th Edition Types of Real Property ê Residential ê Commercial ê Industrial ê Agricultural ê Special Purpose

5 1 Introduction to the Real Estate Business Modern Real Estate Practice 17th Edition The Real Estate Market ê Supply and Demand ê Factors Affecting Supply ê Factors Affecting Demand

6 Many types of property define real estate’s “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. Chapter 2 Real Property and the Law

7 2 Real Property and the Law Modern Real Estate Practice 17th Edition Learning Objectives ê Identify the rights that convey with ownership of real property and the characteristics of real estate ê Describe the difference between real and personal property, and the various types of personalty ê Explain the types of laws that affect real estate ê Distinguish among the concepts of land, real estate and real property

8 2 Real Property and the Law Modern Real Estate Practice 17th Edition ê Land - The earth’s surface extending downward to the center of the earth and upward to infinity, including permanent natural objects ê Real Estate - Land at, above and below the earth’s surface, plus all things permanently attached to it, whether natural or artificial ê Real Property - The interests, benefits and rights that are automatically included in the ownership of land and real estate

9 Modern Real Estate Practice 17th Edition 2 Real Property and the Law

10 Modern Real Estate Practice 17th Edition Bundle of Legal Rights 2 Real Property and the Law

11 Modern Real Estate Practice 17th Edition Real Property Rights é Surface Rights é Subsurface Rights é Air Rights é Water Rights

12 2 Real Property and the Law Modern Real Estate Practice 17th Edition Personal Property All property that does not fit the definition of real property é Manufactured Housing é Plants é Fixtures éIntent éMethod of annexation éAdaptation to real estate éAgreement é Trade Fixtures

13 2 Real Property and the Law Modern Real Estate Practice 17th Edition Characteristics of Real Property é Economic Characteristics éScarcity éImprovements éPermanence of investment éLocation é Physical Characteristics éImmobility éIndestructibility éUniqueness

14 2 Real Property and the Law Modern Real Estate Practice 17th Edition Laws Affecting Real Estate é Contract law é General property law é Agency law é Real estate license law é Federal regulations é Federal, state and local tax laws é Zoning and land use laws é Federal, state and local environmental regulations

15 A variety of housing types are available under the general heading of “home ownership”: single family, small multifamily residences, and high-rise condos. Chapter 3 Concepts of Home Ownership

16 3 Concepts of Home Ownership Modern Real Estate Practice 17th Edition Learning Objectives ê Identify the various types of housing choices available to home buyers ê Describe the issues involved in making a home ownership decision ê Explain the tax benefits of home ownership and the provisions of recent changes to the Tax Code ê Distinguish the various types of homeowner’s insurance policy coverage

17 3 Concepts of Home Ownership Modern Real Estate Practice 17th Edition Types of Housing ê Apartment Complex ê Condominium ê Cooperative ê Planned Unit Development (PUD) ê Retirement Community

18 3 Concepts of Home Ownership Modern Real Estate Practice 17th Edition Types of Housing ê Highrise Development ê Converted-use Property ê Manufactured Housing ê Modular Homes ê Time-share

19 3 Concepts of Home Ownership Modern Real Estate Practice 17th Edition Housing Affordability ê Mortgage Terms ê Ownership Expenses and Ability to Pay ê Investment Considerations ê Tax Benefits

20 3 Concepts of Home Ownership Modern Real Estate Practice 17th Edition Homeowner’s Insurance êCoverage and Claims êBasic vs. Broad-form Policies êLiability êCoinsurance Clause êNational Flood Insurance Program

21 Real estate is an industry about property, but it’s also an industry about people. The concept of agency is entirely about people, and relationships between and among them. Chapter 4 Agency

22 4 Agency Modern Real Estate Practice 17th Edition Learning Objectives ê Identify the various types of agency relationships common in the real estate profession and the characteristics of each ê Describe the fiduciary duties involved in an agency relationship ê Explain the process by which agency is created and terminated and the role of disclosure in agency relationships ê Distinguish the duties owed by an agent to his or her client from those owed to customers

23 Modern Real Estate Practice 17th Edition 4 Agency

24 Modern Real Estate Practice 17th Edition 4 Agency

25 Modern Real Estate Practice 17th Edition Real Estate Agency ê Common-law history ê Definitions: êAgent êSubagent êPrincipal êAgency êFiduciary êClient êCustomer êNonagent

26 4 Agency Modern Real Estate Practice 17th Edition Fiduciary Duties of an Agent ê Care ê Obedience ê Loyalty ê Disclosure ê Accounting ê Confidentiality

27 4 Agency Modern Real Estate Practice 17th Edition Creation ê Express Agency ê Implied Agency Creation and Termination of Agency Termination êCompletion, performance or fulfillment êDeath or incapacity êDestruction or condemnation of the property êExpiration êMutual agreement êBreach êOperation of law

28 4 Agency Modern Real Estate Practice 17th Edition Limitations on Authority

29 4 Agency Modern Real Estate Practice 17th Edition Types of Agency Relationships é Single Agency é Subagency é Seller Representation é Buyer Representation é Owner as Principal

30 4 Agency Modern Real Estate Practice 17th Edition Types of Agency Relationships é Dual Agency éDisclosed Dual Agency éDesignated Agency éUndisclosed Dual Agency é Disclosure Laws é Nonagency é Agency Statutes

31 4 Agency Modern Real Estate Practice 17th Edition Customer-Level Services é Reasonable care and skill in performance é Honest and fair dealing é Disclosure of all facts the licensee knows (or should be expected to know) that materially affect the value or desirability of the property é State law may require additional services or disclosures

32 4 Agency Modern Real Estate Practice 17th Edition

33 4 Agency Modern Real Estate Practice 17th Edition Property Conditions é Latent Defect A hidden structural defect that would not be discovered by ordinary inspection é Stigmatized Property Properties branded “undesirable” because of actual or rumored criminal, tragic or scandalous events that occurred on the property

34 A real estate brokerage is more than a room full of desks. It’s a hive of activity, dependent on people, information, and technology to keep the business running. Chapter 5 Real Estate Brokerage

35 5 Real Estate Brokerage Modern Real Estate Practice 17th Edition Learning Objectives ê Identify the role of technologies, personnel and license laws in the operation of a real estate business ê Describe the various types of antitrust violations common in the real estate industry, and the penalties involved with each ê Explain how a broker’s compensation is usually determined ê Distinguish employees from independent contractors and explain why the distinction is important

36 5 Real Estate Brokerage Modern Real Estate Practice 17th Edition 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.

37 5 Real Estate Brokerage Modern Real Estate Practice 17th Edition Broker-Salesperson Relationship é A real estate salesperson is licensed to perform real estate activities on behalf of a licensed real estate broker é Employee – broker may require employee to follow rules for hours, attendance, etc. é Independent Contractor – broker cannot require specific office hours, attendance, etc.

38 5 Real Estate Brokerage Modern Real Estate Practice 17th Edition Technology é Computers and Laptops é Internet, Web Sites, E-mail é Cell Phones, Digital Cameras, PDAs é Internet Advertising é Security é Electronic Contracting

39 5 Real Estate Brokerage Modern Real Estate Practice 17th Edition Broker’s Compensation é Commission is always negotiable é Commission is usually earned when éa completed sales contract has been executed by a ready, willing and able buyer éthe contract is accepted and executed by the seller écopies of the contract are in the possession of all parties

40 5 Real Estate Brokerage Modern Real Estate Practice 17th Edition Broker’s Compensation é Procuring cause ébroker started a chain of events that resulted in a sale é Ready, willing and able buyer éone who is prepared to buy on the seller’s terms and ready to take positive steps toward consummation of the transaction

41 5 Real Estate Brokerage Modern Real Estate Practice 17th Edition Salesperson’s Compensation Amount and method of compensation is set by agreement between the broker and the salesperson é Fixed salary é Share of commission é 100% Commission Plan é Graduated Commission Split

42 Modern Real Estate Practice 17th Edition 5 Real Estate Brokerage

43 Modern Real Estate Practice 17th Edition Antitrust Laws é Price-fixing é Group boycotting é Allocation of customers or markets é Tie-in agreements é Penalties

44 5 Real Estate Brokerage Modern Real Estate Practice 17th Edition Recent Issues é Fee-for-Services é Minimum Level of Service é Do-Not-Call Registry


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