Florida Real Estate Principles Practices Law 38 th

Florida Real Estate Principles, Practices & Law 38 th Edition Linda L. Crawford Copyright © 2015 Kaplan, Inc. All rights reserved.

Chapter 1 The Real Estate Business

Real Estate Business • The industry or occupation whose activities involve real property transactions handled by licensed real estate professionals • Includes – Real estate brokerage – Property management – Subdivision and development – Appraisal – Financing – Counseling © 2015 Kaplan, Inc.

Real Estate Licensees Provide Specialized Service and Expertise • Details of property transfer • Knowledge of market conditions • Knowledge of how to market real estate or businesses • Knowledge of how to analyze buyer’s needs • Knowledge of laws pertaining to real estate © 2015 Kaplan, Inc.

Real Estate Brokerage • The business of bringing together buyers and sellers or owners and renters and with completing a real estate transaction • Licensees are paid a fee or a commission for their services © 2015 Kaplan, Inc.

Real Estate Sale Process 1. 2. 3. 4. 5. Prospect for sellers and list properties Market listing and prospect for buyers Buyer qualification Offer, negotiation, and signed contract Loan application and RESPA disclosures © 2015 Kaplan, Inc.

Real Estate Sale Process 6. Post-contract activities Credit evaluation Appraisal & property survey 7. Loan approval and title search 8. Title closing Buyer signs mortgage and note Seller signs deed 9. Deed and mortgage recorded 10. Follow-up © 2015 Kaplan, Inc.

Sales and Leasing 5 major sales specialties – Residential – Commercial – Industrial – Agricultural – Businesses © 2015 Kaplan, Inc.

Definitions F. S. 475 – Residential Four or fewer residential units, vacant land zoned for four or fewer residential units, and agricultural property of 10 or fewer acres – Agricultural land of over 10 acres © 2015 Kaplan, Inc.

Businesses Licensees who engage in sale, purchase, or lease of businesses are called business brokers – Activity called business opportunity brokerage – Business opportunity brokerage involves sale or lease of an existing business, including sale of tangible and intangible assets – Active current real estate license is required to sell or lease business opportunities © 2015 Kaplan, Inc.

Farm Area or Target Market A selected and limited area to which a licensee devotes special attention and study © 2015 Kaplan, Inc.

Property Management • Professional service to maintain and manage property on behalf of owners • Involves leasing, managing, marketing, and maintenance of property © 2015 Kaplan, Inc.

Property Manager • Local representative of property owner • Manager’s goal is to produce the greatest possible net income over the longest possible time © 2015 Kaplan, Inc.

Rental Agent vs Property Manager • Rental agents find a tenant and collect a fee • Property managers continue to manage the property once a tenant is secured © 2015 Kaplan, Inc.

Property Management • Need for qualified property managers has grown due to absentee owners • Property managers are compensated different ways – Some are paid a salary – Some are paid a percentage of the gross income – The manager’s compensation is detailed in the management agreement © 2015 Kaplan, Inc.

Appraisal • Process of estimating the value of property • Real estate licensees may appraise real property for compensation (some exceptions) • Appraisers and real estate licensees must abide by USPAP – A set of guidelines (standards of practice) to follow when providing appraisal services • Appraisers charge a fee © 2015 Kaplan, Inc.

Comparative Market Analysis (CMA) • Marketing tool prepared for a potential buyer or seller • Analyze recent sales of similar properties, properties currently offered for sale, and recently expired listings • May not be referred to or be represented as an appraisal • A fee can be charged • Does not have to comply with USPAP © 2015 Kaplan, Inc.

Broker Price Opinion (BPO) • Broker's written opinion of the value of real property often requested by lender for distressed property sales or by relocation company • May not be referred to or be represented as an appraisal • BPO’s do not have to comply with USPAP • Sales associates may complete a BPO for compensation – Sales associate must be supervised by broker – Compensation must be paid to broker © 2015 Kaplan, Inc.

Financing Mortgage Referral fees – A real estate licensee may not accept a referral fee from a lender unless also licensed as a mortgage loan originator © 2015 Kaplan, Inc.

Counseling Counselors • Analyze existing or potential problems and recommend courses of action • Possess education, experience, knowledge, and judgment needed to advise developers, investors, and others © 2015 Kaplan, Inc.

Development and Construction Three general phases 1. Land acquisition and pre-development 2. Subdividing and development 3. Construction © 2015 Kaplan, Inc.

Subdividing and Development Developers submit a plat map to local planning commission Engineer’s plan for land use superimposed on a map of the land to be developed © 2015 Kaplan, Inc.

Categories of Construction Residential Construction 1. Speculative (spec)homes 2. Custom 3. Tract © 2015 Kaplan, Inc.

Dedication Gift of land by an owner to a governmental body for public use © 2015 Kaplan, Inc.

Restrictive Covenants & Deed Restrictions Restrictive Covenants Deed Restrictions • Impose limitations on the use of land in an entire subdivision • Affect how the land can be used and establish criteria such as • Apply to a specific parcel of real estate • An owner has created a restriction on future owners of the parcel of real estate – Minimum square footage – Placement of garage doors – Architectural design Ex: Future landowners may not sell alcoholic beverages on the site © 2015 Kaplan, Inc.

The Role of Government • Local government – Property taxes, occupational licensing, building permits, building moratoriums, and zoning • State government – Coastal management, documentary and intangible tax • Federal government – Fiscal and monetary policy, and government agencies such as HUD, FHA, VA, EPA, and IRS © 2015 Kaplan, Inc.

Professional Organizations • Not all real estate licensees are REALTORS® • REALTOR® is a – Member of National Association of REALTORS® – Member of Florida REALTORS® – Member of local association of REALTORS® • Local association membership is by brokerage entity • Multiple listing service (MLS) – Cooperative service between brokers © 2015 Kaplan, Inc.