Modern Real Estate Practice in Illinois

Chapter 3: Concepts of Home Ownership

© 2008 Dearborn Real Estate Education

Home Ownership• Types of Housing

– Apartment complexes– Condominiums – Cooperative– Planned unit developments– Retirement communities– High-rise developments– Converted-use properties– Manufactured housing– Modular homes– Time shares

© 2008 Dearborn Real Estate Education

Housing Affordability• Mortgage Terms• Ownership Expenses and Ability To Pay

– "Rule of thumb" formula

• Investment Considerations– Gain– Equity– Tax entitlements including 1031 Exchange

• Tax benefits

© 2008 Dearborn Real Estate Education

Homeowner’s Insurance

• Coverage and Claims– Basic form– Broad-form– Special apartment and condominium policies

© 2008 Dearborn Real Estate Education

• Coinsurance clause requires the owner to maintain insurance equal to at least 80 percent of the replacement cost of the dwelling (not including the price of the land).

Homeowner’s Insurance

© 2008 Dearborn Real Estate Education

Federal Flood Insurance Program

• National Flood Insurance Act of 1968• Federal Emergency Management

Agency (FEMA)

© 2008 Dearborn Real Estate Education

Comprehensive Loss Underwriting Exchange (CLUE)

• A database of consumer claim history that enables insurance companies to access prior claim information in the underwriting and rating process