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.

1 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

A Business of Many Specializations 1 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

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

1 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 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.

2 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

2 Real Property and the Law Land - The earth’s 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 earth’s 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

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

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

2 Real Property and the Law Real Property Rights Surface Rights Subsurface Rights Air Rights Water Rights Modern Real Estate Practice 17th Edition

2 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 17th Edition

Characteristics of Real Property 2 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 17th Edition

Laws Affecting Real Estate 2 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 17th Edition

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.

3 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 homeowner’s insurance policy coverage Modern Real Estate Practice 17th Edition

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

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

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

Homeowner’s Insurance 3 Concepts of Home Ownership Homeowner’s 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 it’s also an industry about people. The concept of agency is entirely about people, and relationships between and among them.

4 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 17th Edition

4 Agency Modern Real Estate Practice 17th Edition

4 Agency Modern Real Estate Practice 17th Edition

4 Agency Real Estate Agency Common-law history Definitions: Agent Subagent Principal Agency Fiduciary Client Customer Nonagent Modern Real Estate Practice 17th Edition

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

Creation and Termination of Agency Express Agency Implied Agency Termination Completion, performance or fulfillment Death or incapacity Destruction or condemnation of the property Expiration Mutual agreement Breach Operation of law Modern Real Estate Practice 17th Edition

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

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

Types of Agency Relationships Dual Agency Disclosed Dual Agency Designated Agency Undisclosed Dual Agency Disclosure Laws Nonagency Agency Statutes Modern Real Estate Practice 17th Edition

Customer-Level Services 4 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 Modern Real Estate Practice 17th Edition

4 Agency Modern Real Estate Practice 17th Edition

4 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. It’s a hive of activity, dependent on people, information, and technology to keep the business running.

5 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 broker’s compensation is usually determined Distinguish employees from independent contractors and explain why the distinction is important Modern Real Estate Practice 17th Edition

5 Real Estate Brokerage Brokerage Real Estate Broker 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 17th Edition

Broker-Salesperson Relationship 5 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 17th Edition

5 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 17th Edition

Broker’s Compensation 5 Real Estate Brokerage Broker’s 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 17th Edition

Broker’s Compensation 5 Real Estate Brokerage Broker’s 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 seller’s terms and ready to take positive steps toward consummation of the transaction Modern Real Estate Practice 17th Edition

Salesperson’s Compensation 5 Real Estate Brokerage Salesperson’s 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 Modern Real Estate Practice 17th Edition

5 Real Estate Brokerage Modern Real Estate Practice 17th Edition

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

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