Maryland Real Estate Preperation 18th Edition _ch1-5

8/12/2019 Maryland Real Estate Preperation 18th Edition _ch1-5

1/45

Modern Real Estate Practice18th Edition


2/45

Chapter 1Introduction to the Real Estate

BusinessThe 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.


3/45

32010 Kaplan, Inc.

1 Introduction to the Real Estate

Business Learning objectives

Identifythe various careers available in realestate, and the professional organizations thatsupport them

Describethe five categories of real property

Explainthe operation of supply and demand inthe real estate market

Distinguishthe economic, political, and socialfactors that influence supply and demand


4/45

42010 Kaplan, Inc.


Business A business of many specializations

Brokerage

Appraisal Property management

Financing

Subdivision and development

Home inspection Counseling

Education


5/45

52010 Kaplan, Inc.


Business Types of real property

Residential

Commercial Mixed-use

Industrial

Agricultural

Special Purpose


6/45

62010 Kaplan, Inc.


Business The real estate market

Supply and demand

Factors affecting supply Factors affecting demand


7/45

Many types of property define real estatesproduct. Land is one of the fundamental conceptsof real estate, as well as improvements in theform of houses and outbuildings. The fence

suggests the limits of ownership.

Chapter 2Real Property and the Law


8/45

82010 Kaplan, Inc.

2 Real Property and the Law

Learning objectives

Identifythe rights that convey with ownershipof real property and the characteristics of realestate

Describethe difference between real andpersonal property

Explainthe types of laws that affect real estate

Distinguishbetween the concepts of land, realestate, and real property


9/45

92010 Kaplan, Inc.


Land: the earths surface extendingdownward to the center of the earth andupward to infinity, including permanent

natural objects

Real estate: land at, above, and below theearths surface, plus all things permanently

attached to it, whether natural or artificial Real property: the interests, benefits, and

rights that are automatically included in theownership of land and real estate


10/45

102010 Kaplan, Inc.


Land

Earths surface to the center of the

earth and the airspace above the

land, including the trees and water

Real Estate

Land plus permanent

human-made additions

Real Property

Real estate plus

bundle of legal rights

Air Rights

Surface

Rights

Subsurface

Rights

Physical

Improvements

The Bundle

of Rights


11/45

112010 Kaplan, Inc.

Bundle of Legal Rights



12/45

122010 Kaplan, Inc.


Real property rights

Surface rights

Subsurface rights Air rights

Water rights


13/45

132010 Kaplan, Inc.


Personal property (all property that doesnot fit the definition of real property)

Manufactured housing

Plants Fixtures

Intent

Method of annexation Adaptation to real estate

Agreement

Trade fixtures


14/45

142010 Kaplan, Inc.


Characteristics of real property

Economic characteristics

Scarcity

Improvements

Permanence of investment

Area preference or location

Physical characteristics

Immobility

Indestructibility

Uniqueness


15/45

152010 Kaplan, Inc.


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 environmentalregulations


16/45

Chapter 3Concepts of Home Ownership

A variety of housing types are available under thegeneral heading of home ownership, includingsingle family, small multifamily residences, andhigh-rise condos.


17/45

172010 Kaplan, Inc.

3 Concepts of Home Ownership

Learning objectives

Identifythe various types of housing choicesavailable to homebuyers

Describethe issues involved in making a homeownership decision

Explainthe tax benefits of home ownership

Distinguishthe various types of homeownersinsurance policy coverage


18/45

182010 Kaplan, Inc.


Types of housing

Single-family home

Apartment complex Condominium

Cooperative

Planned Unit Development (PUD)

Retirement community


19/45

192010 Kaplan, Inc.


Types of housing

High-rise development

Converted-use property Manufactured housing

Modular homes

Time-share


20/45

202010 Kaplan, Inc.


Housing affordability

Mortgage terms

Ownership expenses and ability to pay Investment considerations

Tax benefits


21/45

212010 Kaplan, Inc.


Homeowners insurance

Coverage and claims

Basic versus broad-form policies Liability

Coinsurance clause

Comprehensive Loss Underwriting Exchange

(CLUE) National Flood Insurance Program


22/45

Real estate is an industry about property, but itsalso an industry about people. The concept ofagency is entirely about people, and relationshipsbetween and among them.

Chapter 4Agency


23/45

232010 Kaplan, Inc.

4 Agency

Learning objectives

Identifythe various types of agencyrelationships common in the real estate

profession and the characteristics of each Describethe fiduciary duties involved in an

agency relationship

Explainthe process by which agency is

created and terminated and the role ofdisclosure in agency relationships

Distinguishthe duties owed by an agent tohis or her client from those owed to customers


24/45

242010 Kaplan, Inc.

4 Agency

Real estate agency

Common-law history

Definitions: Agent Principal

Agency

Fiduciary

Client

Customer

Nonagent


25/45

252010 Kaplan, Inc.

4 Agency


26/45

262010 Kaplan, Inc.

4 Agency

Fiduciary duties of an agent

Care

Obedience

Loyalty

Disclosure

Accounting

Confidentiality


27/45

272010 Kaplan, Inc.

4 Agency

Creation and termination of agency Creation

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


28/45

282010 Kaplan, Inc.

4 Agency

Limitations on authority

Universal agent

Empowered to do anything the principal could do

personally

General agent

Represents the principal in a broad range of mattersrelated to a particular business or activity

Special agent Authorized to represent the principal in one specific act

or business transaction under detailed instructions


29/45

292010 Kaplan, Inc.

4 Agency

Types of agency relationships

Single agency

Seller representation

Buyer representation

Owner as principal

Dual agency

Disclosed dual agency Designated agency

Undisclosed dual agency


30/45

302010 Kaplan, Inc.

4 Agency


31/45

312010 Kaplan, Inc.

4 Agency

Types of agency relationships

Disclosure laws

Nonagency

Agency statutes


32/45

322010 Kaplan, Inc.

4 Agency

Customer-level services

Reasonable care and skill in performance

Honest and fair dealing

Disclosure of all facts the licensee knows (orshould be expected to know) that materiallyaffect the value or desirability of the property

State law may require additional services ordisclosures


33/45

332010 Kaplan, Inc.

4 Agency

Puffing

Exaggerationof a propertys benefits

Misrepresentation Fraud: Intentionalmisrepresentation of a

material fact to harm or take advantage ofanother

Negligent Misrepresentation: Broker should haveknowna statement was false


34/45

342010 Kaplan, Inc.

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 orrumored criminal, tragic, or scandalous events that

occurred on the property


35/45

A real estate brokerage is more than a room fullof desks. Its a hive of activity; dependent onpeople, information, and technology to keep thebusiness running.

Chapter 5Real Estate Brokerage


36/45

362010 Kaplan, Inc.

Learning objectives Identifythe role of technology, personnel, and

license laws in the operation of a real estate

business Describethe various types of antitrust

violations common in the real estate industry,and the penalties involved with each

Explainhow a brokers compensation is usually

determined Distinguishemployees from independent

contractors and explain why the distinction isimportant

5 Real Estate Brokerage


37/45

372010 Kaplan, Inc.


Brokerage

The business of bringing parties together

Real estate broker A person licensedto buy, sell, exchange, or

lease real propertyfor others and to charge a feefor these services


38/45

382010 Kaplan, Inc.


Broker-salesperson relationship

A real estate salesperson is licensed to performreal estate activities on behalf of a licensed real

estate broker

Employeebroker may require employee tofollow rules for hours, attendance, etc.

Independent contractorbroker cannot require

specific office hours, attendance, etc.


39/45

392010 Kaplan, Inc.


Brokers compensation

Commission is always negotiable

Commission is usually earnedwhen 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


40/45

402010 Kaplan, Inc.


Brokers 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 sellers terms andready to take positive steps toward consummation ofthe transaction


41/45

412010 Kaplan, Inc.


Salespersons compensation

Amount and method of compensation is set byagreement between the broker and the

salesperson

Fixed salary

Share of commission

100% commission plan

Graduated commission split


42/45

422010 Kaplan, Inc.



43/45


44/45

442010 Kaplan, Inc.


Antitrust laws

Price-fixing

Group boycotting

Allocation of customers or markets

Tie-in (or tying) agreements

Penalties


45/45

452010 Kaplan, Inc.


Legal considerations and technology

Internet, Web Sites, e-mail

Internet advertising

Electronic contracting

Do-not-call registry

Documents

Maryland Real Estate Preperation 18th Edition _ch1-5