Modern Real Estate Practice, 18th Edition

Chapter 1 Textbook Rationales

1. b Although brokers, counselors, and inspectors also look closely at a specific property, only an appraiser is qualified to produce a formal opinion of valuean appraisal. If demand is constant and supply increases, sellers compete with each other by lowering prices. Population, demographics, and employment impact demand for a commodity, but government fiscal (spending and taxing) policies strongly influence availability and cost of credit for those who buy or sell properties. When wage levels and job expansion are increasing, workers are more likely to buy real estate; when job opportunities are scarce or wage levels low, demand for real estate usually drops. All are specializations in the field of real estate, and every real estate professional must have a basic knowledge of these specialties. People are licensed by their respective states to be real estate brokers and salespersons. A licensee who then joins the National Association of REALTORS is called a REALTOR. The expected arrival of 2,000 employees and their families in a small town will cause sellers to raise their prices in expectation of the greatly increased demand and the long time it takes to build new housing. It becomes a sellers market, and the many buyers will have to compete for the few houses available. Advising and guiding investors and other buyers is counseling them. Many states require a person to have a real estate license to serve as a real estate advisor/counselor for a fee because it involves skills and duties closely related to real estate brokerage. Brokers are licensed by their state; REALTORS are voluntary members of the National Association of REALTORS, a trade association. Special-purpose properties include schools, churches, cemeteries, and government-held lands. Under the concept of supply and demand, if demand decreases and supply remains the same, producers need to attract more customers, and so prices fall. A broker is a person licensed to conduct real estate activities for others and able to charge a fee for those activities. Population affects the demand for real estate. As population grows, so does the demand for housing. Construction costs, government controls, and the labor force affect supply. Residential, agricultural, and industrial are all classifications of real estate. Development can occur with any of these types. Government financial policies (fiscal policies) affect supply. Population, demographics, and wage levels affect demand for real estate. Uniqueness and immobility of product and parties to the transaction, not product price, govern the way the market reacts to the pressures of supply and demand.

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2010 by Kaplan, Inc.

Modern Real Estate Practice, 18th Edition

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The home inspector, who prepares an analytical report of a visual inspection of the propertys structure and systems, is becoming more important in the real estate transaction as more consumers rely on these reports when buying property. Under the laws of supply and demand, if supply of a commodity decreases with demand remaining the same or increasing, prices go up. The basic responsibility of the property manager is to protect the owners investment and maximize the return on investment. Information about members of a population group is called demographics. These factors are important because they contribute to the amount and type of housing needed.

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2010 by Kaplan, Inc.