8/13/2019 Unit 1 BASIC REAL ESTATE CONCEPTS by Michaele Ann - - PDF document

8/13/2019 1 Unit 1 BASIC REAL ESTATE CONCEPTS

by Michaele Ann Molloy for Dream Weaver School of Real Estate

8/13/2019 2

Why?

Unit 1 Preview

• Real Estate Careers
• Terminology and Definitions
• Characteristic of Land
• Real Property vs Personal Property
• Supply and Demand in Real Estate

Market Real Property aka Real Estate, Realty or Lands

Land

• Air
• Surface
• Subsurface

Real Estate

• Permanently

Attached

• Human-made

Additions (Improvements)

Real Property

• Interests
• Benefits
• Rights

Bundle

• f

Rights

8/13/2019 3

• Tenements – Permanent structure attached to

the land

• Hereditaments – Any interest in real estate

that can be inherited

Characteristics of Real Estate

Physical Economic

Characteristics of Real Estate

Immobility Physical Indestructibility Uniqueness**

8/13/2019 4 Characteristics of Real Estate

Economic

Scarcity Location Improvements Permanence of Investment S L I P

Highest and Best Use

• Greatest actual return on their

investment

• Maximizes the value of the land
• Changes with time

Real Estate as Investment

• Steady Income
• Rate of Return
• Long Term Financial Security
• Hedge against Inflation
• Keep Up with Inflation Rates
• Tax advantages (more in Unit 13)
• You’re the boss

Must have a Basic Knowledge

8/13/2019 5 Real Estate as Investment

• Time-consuming
• Not Liquid vs Stocks/Bonds
• Tenants and maintenance issues
• Extra mortgage to purchase a property
• Risks
• Increased liability

Always Consult Accountant, Lawyer and/or Investment Specialist

• Real Estate Brokerage
• Appraisal
• Property Management
• Financing
• Property development
• Counseling
• Education
• Other Areas
• Professional

Organizations

8/13/2019 6

Professional Organizations

Uses of Real Property

Residential Industrial Commercial Agricultural Special Use

Market –

• A place where goods are bought & sold
• Where value for these goods is

established

• Where it is advantageous for buyers &

sellers to trade.

8/13/2019 7 Supply vs. Demand

Factors Affecting Supply

• Labor Force/Construction

Costs

• Gov’t Controls & Financial

Policies

Factors Affecting Demand

• Population
• Demographics
• Employment & Wage

Levels

Business Cycle

Expansion Recession Depression Revival

*Gradual & Indistinct *Gov’t Attempts to Curb Fluctuations

2 Major Classifications of Property

Personal Property (aka Personality)

Anything that is moveable [chattel] and does not qualify as real property

Real Property

aka Real Estate, Realty or Lands

8/13/2019 8

Do I Really Need a License?

State law stipulates that a person must hold a real estate license to

• Sell, buy, auction, negotiate,

leases, rents for another person

• Services are compensated by a

commission or bonus.

Parcels Numbers:

• APN = Assessors Parcel Number
• AIN = Assessors Identification Number
• PIN = Property Identification Number
• PID = Property ID
• Property Account Number
• Tax Account Number
• Rarely used: Sidwell Number

Questions

8/13/2019 9

The “bundle of rights” refers to a set of rights:

a) enjoyed by the owner of the property b) that is synonymous with the Bill of Rights c) guaranteed to citizens by the national statute of rights d) specified in a deed or land contract

The “bundle of rights” refers to a set of rights:

a). enjoyed by the owner of the property A homeowner is very upset over a drone that a neighbor flies over his house. He takes his case to court to end this possible violation of rights. Does he have a case, and on what basis?

a.

• No. The neighbor is not physically on his property

b.

• No. The drone is in the air, so he cannot exercise any

surface rights. c.

• Yes. The drone infringes on his air rights.

8/13/2019 10

A homeowner is very upset over a drone that a neighbor flies over his house. He takes his case to court to end this possible violation of rights. Does he have a case, and on what basis?

c). Yes. The drone infringes on his air rights.