Toby McCosker - Introduction to the real estate business growth

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.

2. 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

3. 1 Introduction to the Real Estate Business A Business of Many Specializations  Brokerage  Appraisal  Property management  Financing  Subdivision and development  Home inspection  Counseling  Education

4. 1 Introduction to the Real Estate Business Types of Real Property  Residential  Commercial  Industrial  Agricultural  Special Purpose

5. 1 Introduction to the Real Estate Business The Real Estate Market  Supply and Demand  Factors Affecting Supply  Factors Affecting Demand

6. 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.

7. 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

8. 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

9. 2 Real Property and the Law

10. 2 Real Property and the Law Bundle of Legal Rights

11. 2 Real Property and the Law Real Property Rights  Surface Rights  Subsurface Rights  Air Rights  Water Rights

12. 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

13. 2 Real Property and the Law Characteristics of Real Property  Economic Characteristics Scarcity Improvements Permanence of investment Location  Physical Characteristics Immobility Indestructibility Uniqueness

14. 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

15. 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.

16. 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

17. 3 Concepts of Home Ownership Types of Housing  Apartment Complex  Condominium  Cooperative  Planned Unit Development (PUD)  Retirement Community

18. 3 Concepts of Home Ownership Types of Housing  Highrise Development  Converted-use Property  Manufactured Housing  Modular Homes  Time-share

19. 3 Concepts of Home Ownership Housing Affordability  Mortgage Terms  Ownership Expenses and Ability to Pay  Investment Considerations  Tax Benefits

20. 3 Concepts of Home Ownership Homeowner’s Insurance Coverage and Claims Basic vs. Broad-form Policies Liability Coinsurance Clause National Flood Insurance Program

21. 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.

22. 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

23. 4 Agency

24. 4 Agency

25. 4 Agency Real Estate Agency  Common-law history  Definitions:  Agent  Subagent  Principal  Agency  Fiduciary  Client  Customer  Nonagent

26. 4 Agency Fiduciary Duties of an Agent  Care  Obedience  Loyalty  Disclosure  Accounting  Confidentiality

27. 4 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  Express Agency  Implied Agency

28. 4 Agency Limitations on Authority Universal Agent General Agent Special Agent Empowered to do anything the principal could do personally Represents the principal in a broad range of matters related to a particular business or activity Authorized to represent the principal in one specific act or business trans- action under detailed instructions

29. 4 Agency Types of Agency Relationships  Single Agency  Subagency  Seller Representation  Buyer Representation  Owner as Principal

30. 4 Agency Types of Agency Relationships  Dual Agency Disclosed Dual Agency Designated Agency Undisclosed Dual Agency  Disclosure Laws  Nonagency  Agency Statutes

31. 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

32. 4 Agency Puffing Misrepresentation Fraud:Intentional misrepresentation of a material fact to harm or take advantage of another Exaggeration of a property's benefits Negligent Misrepresentation: Broker should have known a statement was false

33. 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

34. 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.

35. 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

36. 5 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.

37. 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.

38. 5 Real Estate Brokerage Technology  Computers and Laptops  Internet, Web Sites, E-mail  Cell Phones, Digital Cameras, PDAs  Internet Advertising  Security  Electronic Contracting

39. 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

40. 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

41. 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

42. 5 Real Estate Brokerage

43. 5 Real Estate Brokerage Antitrust Laws  Price-fixing  Group boycotting  Allocation of customers or markets  Tie-in agreements  Penalties

44. 5 Real Estate Brokerage Recent Issues  Fee-for-Services  Minimum Level of Service  Do-Not-Call Registry

45. Thanks