Modern Real Estate Practice in Pennsylvania 12th Edition Chapter 14: The Real Estate Business

2 ©2012 Kaplan, Inc. 14The Real Estate Business Learning objectives –Identify various careers available in real estate, and professional organizations that support them –Describe five categories of real property –Explain operation of supply and demand in the real estate market –Explain economic, political, and social factors that influence supply and demand –Distinguish types of insurance and coverages –Define key terms

14The Real Estate Business A business of many specializations –Brokerage –Appraisal –Property management –Financing –Subdivision and development –Home inspection –Counseling –Education 3 ©2012 Kaplan, Inc.

14The Real Estate Business Professional organizations National Association of Realtors ® (NAR) –Affiliated institutes, societies, and councils National Association of Real Estate Brokers Other professional associations 4 ©2012 Kaplan, Inc.

14The Real Estate Business Types of real property –Residential –Commercial –Mixed-use –Industrial –Agricultural –Special purpose 5 ©2012 Kaplan, Inc.

14The Real Estate Business The real estate market –Supply and demand –Factors affecting supply Labor force and construction costs Government controls and fiscal policies –Factors affecting demand Population Demographics Employment and wage levels 6 ©2012 Kaplan, Inc.

Home Ownership A variety of housing types are available under the general heading of “home ownership,” including single-family, small multifamily residences, and highrise condos.

14 The Real Estate Business Types of housing –Single-family home –Apartment complex –Condominium –Cooperative –Planned unit development (PUD) –Converted-use properties –Retirement community –Factory-built homes 8 ©2012 Kaplan, Inc.

14 The Real Estate Business Types of housing –Highrise development –Converted-use property –Manufactured housing –Modular homes –Time-share 9 ©2012 Kaplan, Inc.

14 The Real Estate Business Housing affordability –Mortgage terms –Ownership expenses and ability to pay Housing costs: 28 percent of gross monthly income Total debt: 36 percent of gross monthly income –Investment considerations –Tax benefits Capital gains exclusion Tax deductions 10 ©2012 Kaplan, Inc.

14 The Real Estate Business Homeowners’ insurance –Coverage and claims –Broad-form policies –Liability –Coinsurance clause –Comprehensive Loss Underwriting Exchange (CLUE report) 11 ©2012 Kaplan, Inc.

14 The Real Estate Business Flood insurance –Administered by Federal Emergency Management Agency (FEMA) –Elevation certificate –Special Flood Hazard Areas (SFHAs) –What’s covered and what is not –Advance purchase required Mine subsidence insurance (MDI) 12 ©2012 Kaplan, Inc.