National Portion

364 Pages·2011·3.74 MB·English

Real Estate Fundamentals

(National Portion)

Student Manual

For Use with the PowerPoint/Audio Course Format
Recommended Textbook: Real Estate Principles

Roy L. Ponthier, Ph.D., Ed.D., CDEI, DREI
Executive Director

10/11
Table of Contents

1. An Introduction to Real Estate ................................................................................................... 3
2. The Nature of Real Property ..................................................................................................... 17
3. Real Property Ownership .......................................................................................................... 28
4. Transferring Ownership ............................................................................................................ 43
5. Encumbrances ........................................................................................................................... 63
6. Public Restrictions on Property Rights ..................................................................................... 80
7. Contract Law ............................................................................................................................. 93
8. Types of Real Estate Contracts ............................................................................................... 111
9. Real Estate Agency Law ......................................................................................................... 136
10. Regulation of the Real Estate Profession .............................................................................. 161
11. Real Estate Financing ........................................................................................................... 178
12. Applying for a Mortgage Loan ............................................................................................. 203
13. Real Estate Appraisal ............................................................................................................ 227
14. Closing Real Estate Transactions.......................................................................................... 258
15. Income Taxation and Real Estate ......................................................................................... 274
16. Civil Rights and Fair Housing .............................................................................................. 292
17. Property Management ........................................................................................................... 303
18. Home Ownership and Construction ...................................................................................... 321
19. Real Estate Math ................................................................................................................... 334

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1. An Introduction to Real Estate

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An Introduction ___________________________________
To Real Estate ___________________________________
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The Real Estate Industry
 Real estate industry includes: ___________________________________
Real estate brokers and salespersons
Property managers ___________________________________
Inspectors
Title company employees
Developers ___________________________________
Investment counselors
Appraisers ___________________________________
Etc.

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The Real Estate Industry
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 Real estate industry divided into two
branches:
Residential real estate (single-family ___________________________________
homes, condominium complexes, etc.)
Cofofmicem beurcilidailn rgesa,l iensdtuastter i(arle ptaroilp perrotpy,e rettyc,. ) ___________________________________
 It’s common for agents to specialize in either
residential or commercial property, and to ___________________________________
focus on either sales or rentals.

___________________________________
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Real Estate Transactions
___________________________________
 Real estate transaction may be:
Sale
Lease ___________________________________
Exchange
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Real Estate Transactions
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 Most basic real estate transaction is the sale
of a home, which often involves:
Listing property ___________________________________
Showing property
Submitting and considering offers to ___________________________________
purchase
Negotiations between seller and buyer
Execution of the contract ___________________________________
Property inspections

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Real Estate Transactions
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 Transactions involved with sale of a home
(cont.):
Financing arrangements ___________________________________
Property appraisal
Closing preparations ___________________________________
Buyer’s walk-through
Closing
___________________________________

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Real Estate Transactions
Listing
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 Most sellers put home on market by listing it
with a real estate agent.
Seller signs contract agreeing to pay agent ___________________________________
compensation (commission) in exchange
for agent’s efforts to find a buyer.
Agent (listing agent) submits property ___________________________________
information to multiple listing service
(MLS).
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Real Estate Transactions
Showing the Property
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 Prospective buyers tour home with their own
agents, with the listing agent, or with another
agent from the MLS. ___________________________________
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Real Estate Transactions
Offers
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 A buyer submits written offer to purchase,
stating:
Price buyer is willing to pay ___________________________________
Closing date
Other terms of sale ___________________________________
 In active market, multiple competing offers
are common for desirable property.
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Real Estate Transactions
Offers
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 An offer is usually accompanied by a deposit:
money tendered to a seller to show the offer
is serious and in good faith. ___________________________________
If offer is rejected, deposit is returned to
buyer.
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If offer is accepted but sale later falls
through, deposit may be returned to buyer,
depending on circumstances. ___________________________________

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Real Estate Transactions
Negotiations
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 Seller may want to negotiate changes in the
terms presented in buyer’s offer.
Seller uses a counteroffer to present his or ___________________________________
her changes to the offer.
Bcouuynetre mroafyfe trh –enn ergesoptioantido nwsi tthh eann ogtoh ebra ck ___________________________________
and forth.
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Real Estate Transactions
Contract
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 When offer (or counteroffer) is accepted, a
legally binding contract is formed.
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 Typically, contract is contingent on the
fulfillment of certain conditions specified in
___________________________________
the contract (such as satisfactory inspection
results).
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Real Estate Transactions
Inspections
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 Buyer may order a home inspection to have
home’s construction and condition evaluated.
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 Other professional inspections may be
arranged as well: pest inspection, soil stability
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test, etc.
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Real Estate Transactions
Financing
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 Unless buyer can pay for property in cash,
financing must be arranged.
Usually buyer comes up with some cash ___________________________________
(downpayment) and borrows most of the
purchase price from a mortgage lender.
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Real Estate Transactions
Appraisal
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 Since property will serve as collateral for loan,
lender will require an appraisal.
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 Appraiser evaluates property and provides
estimate of its market value to lender.
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Real Estate Transactions
Closing Preparations
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 After contract is signed, many tasks must be
completed before sale closes:
Arrange for seller’s mortgage to be paid off ___________________________________
Order title insurance policy
Have deed and other documents recorded ___________________________________
Etc.
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Real Estate Transactions
Closing Preparations
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 May be handled by the parties or by closing
agent(escrow agent, broker, attorney,
lender, or title company). ___________________________________
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Real Estate Transactions
Walk-through
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 Buyer may make one final visit/inspection
before closing to ensure all required repairs
have been completed properly, and that ___________________________________
property is in condition it’s supposed to be in.
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Real Estate Transactions
Closing
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 Closing (settlement) is final step in real estate
transaction.
Closing may take place at meeting ___________________________________
attended by parties, agents, and
representatives from lender and title
company. ___________________________________
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Real Estate Brokerage
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 Broker: Acts as intermediary in a transaction,
helping to arrange the purchase or sale of
goods, services, or other commodities on ___________________________________
behalf of others.
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Real Estate Brokerage
Brokers and Salespersons
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 Real estate salesperson’s license: allows
salesperson to work with members of public
in real estate transactions only if supervised ___________________________________
by real estate broker.
Requirement of state license laws.
Broker’s license requires additional ___________________________________
education and/or experience.
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Real Estate Brokerage
Brokers and Salespersons
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 ―Real estate agent‖: generic term for person
who sells real estate (broker or salesperson)
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 ―Realtor‖ ≠ ―real estate agent‖
REALTOR®: member of National ___________________________________
Association of REALTORS®
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Brokerage Services
Seller’s Agent
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 Services for sellers:
Pricing property
Preparing home for showing ___________________________________
Effective advertising
Showing to prospective buyers ___________________________________
Negotiations and paperwork
Monitoring closing ___________________________________

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Brokerage Services
Pricing Property
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 To help seller set realistic listing price, agent
uses competitive market analysis (CMA).
 Requires agent’s knowledge regarding: ___________________________________
area/neighborhood,
recent sales/listings, and ___________________________________
which factors matter most in determining
market value.
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Brokerage Services
Preparing the Home
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 Agent can instruct seller which steps to make
home more attractive are worth the time and
money. ___________________________________
 Some agents specialize in staging homes for ___________________________________
showing.
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Brokerage Services
Effective Advertising
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 Types of advertising:
classified newspaper ads
mailed flyers ___________________________________
display ad in ―Homes for Sale‖ magazine
 Most important: listing in MLS database ___________________________________
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Brokerage Services
Showing the Property
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 Agent can hold open house: scheduled time
when home is open for viewing and agent is
available to answer questions. ___________________________________
 Agent can also show home to prospective ___________________________________
buyers and other agents, using keybox
provided by seller.
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Brokerage Services
Negotiations and Paperwork
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 Agents help parties negotiate offer and
acceptance.
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 Seller often relies on agent to provide
necessary disclosure forms and help fill them
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out.
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Brokerage Services
Monitoring the Closing Process
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 Agent acts as liaison between seller, buyer,
and other parties.
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 Helps resolve any problems that may arise.
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Brokerage Services
Buyer’s Agent
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 Agent can help buyer with:
Finding the right property
Entering into contract ___________________________________
Obtaining financing
Completing transaction ___________________________________
 Agent working with buyer may actually
represent seller.
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Brokerage Services
Buyer’s Agent
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 Buyer can find selling agent by:
Referral
Visiting brokerage ___________________________________
Contacting agent after seeing For Sale sign
Open house ___________________________________
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Brokerage Services
Buyer’s Agent
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 In initial interview, buyer’s agent determines
what buyer wants (and can afford).
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 Agent then searches MLS and takes buyer to
see properties.
___________________________________
 Agent typically helps buyer fill out offer form
and presents offer. ___________________________________

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