What is Real Estate? – Types, The Ultimate Guide, and More
What is Real Estate?
Real estate is a critical industry in our society. People need to buy and sell properties, and they need experts to help understand and manage transactions.
In the last decade, software and websites have modified the traditional real estate process. But regardless of how much technology advances, it will never replace the real estate broker, the agent.
Because real estate is as essential to our society, it remains an enigma for most consumers. Between the numerous laws, paperwork, and best practices, many go into buying and selling property.
It helps consumers better understand the real estate process and equip real estate agents to market their businesses better. We believe this guide can help both, especially those who consider real estate a career option.
What are the Types of Real Estate?
It defines as property and buildings on specific land. It also includes aerial and underground rights above and below ground, respectively. The term “real estate” means real property.
As a physical entity, it includes four different categories of property.
- which includes newly built and resale homes.
- You probably know residential real estate like single-family homes.
- This category also includes condos, townhouses, duplexes, and vacation homes.
- which mostly includes places of business. This category includes shopping malls, shopping centers, hospitals, universities, hotels, and offices.
- Although they are technically residential, apartment buildings often consider commercial because they generate income for their owners.
- which includes the manufacture of buildings and warehouses used for research, production, storage, and distribution of products.
- which includes working farms and ranches. It also refers to vacant lands, such as undeveloped land and land where houses or buildings assemble.
- It is essential to understand the different types of real estate because the sale and purchase of property vary according to its kind.
- Other courses, such as zoning, construction, and appraisal, are also handled independently.
- Because these groups and their rules and regulations are very different, real estate agents generally specialize in a specific type. Next, we will talk more about the real estate agency below.
The Ultimate Guide to Real Estate
Depending on the type of property and the people involved, each real estate transaction’s specific steps can fluctuate slightly. But for the most part, most transactions look the same.
For the sake of continuity and simplicity, we will use a Residential Operation to outline the real estate process. Commercial and industrial transactions follow a similar approach, but the residential process is probably the most related among consumers.
We’ll cover both the seller and buyer perspectives below.
1. Hire an Agent
- When someone decides to sell your home, the first thing they might do is hire a listing agent (unless they choose to sell it themselves as a sale by the owner ).
- Historically, clients have originated their listing agents through personal recommendations or a local ad in a newspaper or brochure.
- Today, some marketers find their agents through online means, such as social media, online advertisements, or Zillow or Trulia sites. We talk more about some of these means in the next section.
- Listing agents typically give a listing presentation. This launch will also highlight how they would price and market their home, commission structure, and other competitive advantages.
- It helps clients decide which agent is the best fit.
- When somebody chooses to buy a home, they can do one of two things: secure a buyer’s agent.
- It can help them discover and buy a property or start buying a property for themselves, choosing to hire an agent after finding a property they like.
- There is no right or wrong way to hire a buyer’s agent, although an agent might present you with potential properties that you might not otherwise have found on your own.
- Interviewing and securing a buyer’s agent early in the real estate process can be much more rewarding than merely letting the listing agent take care of both parties.
- Buyers can also benefit from representation.
2. Listing or Display of the Property
- As a vendor, the next step would be to list your property so that potential buyers can find it. The stages in this process include.
- Determining the price of your house, with what your agent can help you.
- Calculate using your home’s location, condition, amenities, and improvements, and the cost of similar properties.
- Agents will compile a Comparative Market Analysis (CMA) to help you understand how and why your home price.
- Enter your home into the Internet Data Exchange (IDX), which your agent has access.
- The IDX brings together its listings from across the country. It allows members of the Multiple Listing Service (MLS) to share and market their properties to other potential buyers and agents.
- Market your house. Whether investing in traditional methods or listing your home on other real estate websites, these marketing tactics will increase your property’s exposure to other agents and buyers. (We will cover some popular ones below .)
- They are hosting open houses and exhibitions with buyers. While photos (and investing in a professional photographer) can help homes sell faster, open houses and exhibits give possible buyers a first-hand look at your household.
- These in-person experiences also let buyers ask questions and express concerns, saving both parties time and energy in the long run.
- Some agents may choose to create Videos and Virtual Staging Opportunities for your home, too.
- Some sellers choose to sell their own home, known as a Sale by Owner (FSBO).
- FSBOs theoretically save money on sellers’ commissions (as seller’s clients pay both listing and buyer’s agents), but in turn, they don’t have access to CMAs, IDX, or any agent or knowledge of agents.
- In some cases, FSBO vendors may pay a cooperation fee to the buyer’s agent who works with whom they buy their home.
3. Purchase/Sale and Closing of the Property
- Let’s say you are selling your house, and someone wants to buy it. What happens then?
- Well, first of all, the potential buyer would make an offer on your home.
- The request could be strictly at the asking price, depending on how competitive the market is, desperate you and the seller.
- Then you would consider the offer, check with your agent (if you have one), and accept or decline.
- There could be a slight back and out, or both parties could immediately agree and immediately sign a sales contract.
- If you, the seller, had agreed with a right of first refusal clause, you would have to allow the potentially interested party to see and make an offer on your property before any other party.
- Right of first refusal clauses generally writes in contracts between family members, tenants, and landlords, and the case of a homeowner association (HOA).
- As a seller, the next steps do not involve you directly.
- At this point, the buyer will send their money, request a home inspection, and work with their mortgage investor to secure an appraisal and establish their mortgage.
- You may need to address any concerns or questions during this period, but you sit back and wait for the most part.
- The next time you see the buyers, it will be at closing.
- A home closing is a fancy term for when title to the property transfer, the down payment made, and the seller and buyer’s names are signed multiple times.
- After closing, you would hand over the keys and be on your merry way, although with thousands of dollars richer.
Real estate is a complex and challenging industry, but it is still vital to our economy and lifestyle.
Whether you were interested in buying your first home or curious about it as a career, it’s essential to understand the real estate process and the roles consumers and agents play in every transaction.
The real estate sector is an industry that plays by its own rules. As technology, income, shopping habits, and lifestyles change, real estate will only get more involved and exciting. It is your job to be aware of it.
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