Real Estate Exam Concepts

Introduction

• Presenter: Joe from Prep Agent
• Topic: 10 essential concepts to know for passing the real estate exam.
• Purpose: Understanding these concepts is crucial for obtaining a real estate license and pursuing a career in real estate.

Key Concepts to Understand

1. Real vs. Personal Property

• Real Property: Immovable; includes the house and anything attached.
• Personal Property: Movable; includes items like keys and leases (contracts with the person).
• Remember: Real property stays with real estate; personal property goes with the person.

2. Estates and Property

• Freehold Estates: Indefinite duration; implies ownership.
  • Types: Fee Simple Absolute, Fee Simple Defeasible, Life Estate.
  • Fee Simple Absolute: Highest ownership degree.
  • Fee Simple Defeasible: Ownership contingent on conditions.
  • Life Estate: Ownership based on another's life.
• Less Than Freehold Estates: Limited time; leases.
  • Types: Estate for Years, Periodic Tenancy, Estate at Will, Estate at Sufferance.

3. Government Powers (PETE)

• Police Power: Regulates property use (e.g., zoning, building codes).
• Eminent Domain: Government takes property with compensation (process: condemnation).
• Taxation: Required payment to government.
• Escheat: State takes property if no heirs are available.

4. Types of Ownership

• Severalty: Ownership by one person.
• Concurrent Ownership: Ownership with others.
  • Types: Joint Tenancy (with right of survivorship) and Tenancy in Common (no right of survivorship).
  • Joint Tenancy: Unity of Time, Title, Interest, Possession.
  • Tenancy in Common: Only unity of possession.

5. Essential Elements of Value (STUD)

• Scarcity: Availability.
• Transferability: Ability to sell.
• Utility: Usability.
• Demand: Desire for item.
• Acronym: STUD or DUST.

6. Types of Depreciation

• Economic Obsolescence: Value loss due to external factors (e.g., nearby airport).
• Functional Obsolescence: Poor design (e.g., one bathroom in a large house).
• Physical Deterioration: Wear and tear.

7. Appraisal Methods

• Market Data Approach: Using comparable properties (comps).
• Cost Replacement Approach: Cost to replace building brand new.
• Capitalization Income Approach: Value based on property income.

8. Deeds and Title

• Deed: Evidence of transfer.
• Title: Ownership.

9. Liens

• Lean = Money Owed.
• Specific Lien: Targets specific property (e.g., mortgage).
• General Lien: Targets all assets (e.g., income tax issues).

10. Fair Housing Laws

• Enacted: 1968.
• Violations: Steering, Blockbusting, Panic Selling, Redlining.
  • Steering: Directing buyers to certain areas based on race/ethnicity.
  • Blockbusting/Panic Selling: Inducing sellers to sell based on fear.
  • Redlining: Denying loans based on area demographics.

Conclusion

• Understanding these 10 concepts is foundational for the real estate exam.
• Additional detailed study is recommended.
• Visit prepaigent.com for more resources.
• Encourage thorough review and understanding before moving to advanced topics.