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This article possibly contains original research. (July 2014)
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Real estate agents and real estate brokers are people who represent sellers or buyers of real estate or real property. While a broker may work independently, an agent usually works under a licensed broker to represent clients.[1] Brokers and agents are licensed by the state to negotiate sales agreements and manage the documentation required for closing real estate transactions.
A real estate broker typically receives a real estate commission for successfully completing a sale. Across the U.S, this commission can generally range between 5-6% of the property's sale price for a full-service broker but this percentage varies by state and even region.[2]
In most jurisdictions in the United States, a person must have a license to perform licensed activities, and these activities are defined within the statutes of each state. The main feature of the requirement for having a license to perform those activities is the work done "for compensation". Hence, hypothetically, if a person wants to help a friend out in either selling or buying a property, and no compensation of any kind is expected in return, then a license is not needed to perform all the work. However, since most people would expect to be compensated for their efforts and skills, a license would be required by law before a person may receive remuneration for services rendered as a real estate broker or agent. Unlicensed activity is illegal and the state real estate commission has the authority to fine people who are acting as real estate licensees, but buyers and sellers acting as principals in the sale or purchase of real estate are usually not required to be licensed. It is important to note that in some states, lawyers handle real estate sales for compensation without being licensed as brokers or agents. However, even lawyers can only perform real estate activities that are incidental to their original work as a lawyer. It cannot be the case that a lawyer can become a seller's selling agent if that is all the service that is being requested by the client. Lawyers would still need to be licensed as a broker if they wish to perform licensed activities. Nevertheless, lawyers do get a break in the minimum education requirements (for example, 90 hours in Illinois).[3]
Some other states have recently eliminated the salesperson's license, instead, all licensees in those states automatically earn their broker's license.
The term "agent" is not to be confused with salesperson or broker. An agent is simply a licensee that has entered into an agency relationship with a client. A broker can also be an agent for a client. It is commonly the firm that has the actual legal relationship with the client through one of their sales staff, be they salespersons or brokers.
In all states, the real estate licensee must disclose to prospective buyers and sellers the nature of their relationship [4]
Some U.S. state real estate commissions – notably Florida's[5] after 1992 (and extended in 2003) and Colorado's[6] after 1994 (with changes in 2003) created the option of having no agency or fiduciary relationship between brokers and sellers or buyers.
As noted by the South Broward Board of Realtors, Inc. in a letter to State of Florida legislative committees:
"The Transaction Broker crafts a transaction by bringing a willing buyer and a willing seller together and provides the legal documentation of the details of the legal agreement between the same. The Transaction Broker is not a fiduciary of any party, but must abide by the law as well as professional and ethical standards." (such as NAR Code of Ethics).
The result was that, in 2003, Florida created a system where the default brokerage relationship had "all licensees ... operating as transaction brokers, unless a single agent or no brokerage relationship is established, in writing, with the customer"[7][8] and the statute required written disclosure of the transaction brokerage relationship to the buyer or seller customer only through July 1, 2008.
In the case of both Florida[8] and Colorado,[6] dual agency and sub-agency (where both listing and selling agents represent the seller) no longer exist.
Other brokers and agents may focus on representing buyers or tenants in a real estate transaction. However, licensing as a broker or salesperson authorizes the licensee to legally represent parties on either side of a transaction and providing the necessary documentation for the legal transfer of real property. This business decision is for the licensee to decide. They are fines for people acting as real estate agents when not licensed by the state.
In the United Kingdom, an estate agent is a person or business entity whose business is to market real estate on behalf of clients. There are significant differences between the actions, powers, obligations, and liabilities of brokers and estate agents in each country, as different countries take markedly different approaches to the marketing and selling of real property.
Before the Multiple Listing Service (MLS) was introduced in 1967, when brokers (and their licensees) only represented sellers by providing a service to provide legal documentation on the transfer real property, the term "real estate salesperson" may have been more appropriate than it is today, given the various ways that brokers and licensees now help buyers through the legal process of transferring real property. Legally, however, the term "salesperson" is still used in many states to describe a real estate licensee.[citation needed]
After gaining some years of experience in real estate sales, a salesperson may decide to become licensed as a real estate broker (or Principal/qualifying broker) in order to own, manage, or operate their own brokerage. In addition, some states allow college graduates to apply for a broker's license without years of experience. College graduates fall into this category once they have completed the state-required courses as well. California allows licensed attorneys to become brokers upon passing the broker exam without having to take the requisite courses required of an agent. Commonly more coursework and a broker's state exam on real estate law must be passed. Upon obtaining a broker's license, a real estate agent may continue to work for another broker in a similar capacity as before (often referred to as a broker associate or associate broker) or take charge of their own brokerage and hire other salespersons (or broker licensees). Becoming a branch office manager may or may not require a broker's license. Some states allow licensed attorneys to become real estate brokers without taking any exam. In some states, there are no "salespeople" as all licensees are brokers.[9]
Real Estate Services are also called trading services [10]
Some home buyers or sellers choose to forgo representation and proceed without a real estate agent. In these cases, the unrepresented party assumes full responsibility for navigating the transaction, including showings, negotiations, and paperwork.
For example, some home sellers use “flat-fee brokers” or “limited-service agents” who offer minimal services and avoid establishing a full agency relationship. These agents charge a fixed fee—often around $500[11]—to list the property in the multiple listing service (MLS), while the seller represents themselves during showings and negotiations. This approach reduces total commission costs but limits professional guidance and fiduciary protections associated with full-service agency.
In consideration of the brokerage successfully finding a buyer for the property, a broker anticipates receiving a commission for the services the brokerage has provided. Usually, the payment of a commission to the brokerage is contingent upon finding a buyer for the real estate, the successful negotiation of a purchase contract between the buyer and seller, or the settlement of the transaction and the exchange of money between buyer and seller. Under common law, a real estate broker is eligible to receive their commission, regardless of whether the sale actually takes place, once they secure a buyer who is ready, willing, and able to purchase the dwelling.[12]
Economist Steven D. Levitt famously argued in his 2005 book Freakonomics that real estate brokers have an inherent conflict of interest with the sellers they represent because their commission gives them more motivation to sell quickly than to sell at a higher price. Levitt supported his argument with a study finding brokers tend to put their own houses on the market for longer and receive higher prices for them compared to when working for their clients. He concluded that broker commissions will reduce in future.[13] A 2008 study by other economists found that when comparing brokerage without listing services, brokerage significantly reduced the average sale price.[14]
Real estate brokers who work with lenders can not receive any compensation from the lender for referring a residential client to a specific lender. To do so would be a violation of a United States federal law known as the Real Estate Settlement Procedures Act (RESPA). RESPA ensures that buyers and sellers are given adequate notice of the Real Estate settlement process.[15]
In the United States, the term realtor is trademarked by the National Association of Realtors, which uses it to refer to its active members, who may be real estate agents or brokers.[16][17][18] In Canada, the trademark is used by members of the Canadian Real Estate Association.[19] Both organizations advise against the use of realtor as a generic synonym for real estate agent.[19]
States issue licenses for an annual or multi-year period and require real estate agents and brokers to complete continuing education prior to renewing their licenses. For example, California licensees must complete 45 hours of continuing education every four years in topics such as agency, trust fund handling, consumer protection, fair housing, ethics, and risk management.[20]
Several notable groups exist to promote the real estate industry and to assist professionals.
Media related to Real estate agents at Wikimedia Commons
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This article needs additional citations for verification. (July 2019)
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A housing estate (or sometimes housing complex, housing development, subdivision or community) is a group of homes and other buildings built together as a single development. The exact form may vary from country to country.
Popular throughout the United States[1] and the United Kingdom, they often consist of single family detached, semi-detached ("duplex") or terraced homes, with separate ownership of each dwelling unit. Building density depends on local planning norms.
In major Asian cities, such as Hong Kong, Kuala Lumpur, Shanghai, Shenzhen, Singapore, Seoul, Taipei, and Tokyo, an estate may range from detached houses to high-density tower blocks with or without commercial facilities; in Europe and America, these may take the form of town housing, high-rise housing projects, or the older-style rows of terraced houses associated with the Industrial Revolution, detached or semi-detached houses with small plots of land around them forming gardens, and are frequently without commercial facilities and such.
In Central and Eastern Europe, living in housing estates is a common way of living. Most of these housing estates originated during the communist era because the construction of large housing estates was an important part of building plans in communist countries in Europe. They can be located in suburban and urban areas.
Accordingly, a housing estate is usually built by a single contractor, with only a few styles of house or building design, so they tend to be uniform in appearance.
A housing development is "often erected on a tract of land by one builder and controlled by one management."[2] In the United Kingdom, the term is quite broad and can include anything from high-rise government-subsidised housing right through to more upmarket, developer-led suburban tract housing. Such estates are usually designed to minimise through-traffic flows and provide recreational space in the form of parks and greens.
The use of the term may[original research?] have arisen from an area of housing being built on what had been a country estate as towns and cities expanded in and after the 19th century. It was in use by 1901.[3] Reduction of the phrase to mere "estate" is common in the United Kingdom and Ireland (especially when preceded by the specific estate name), but not in the United States.
There are several different housing types utilized by housing developers.[4] Each of the different housing types will have their distinctive characteristics, density ranges, number of units, and floors.[4]
Due to dense population and government control of land use, Hong Kong's most common residential housing form is the highrise housing estate, which may be publicly owned, privately owned, or semi-private. Due to the real-estate developers oligopoly (sometimes called real estate hegemony, Chinese: 地產霸權) in the territory, and the economies of scale of mass developments, there is the tendency of new private tower block developments with 10 to over 100 towers, ranging from 30 to 70 stories high.
Public housing provides affordable homes for those on low incomes, with rents which are heavily subsidised, financed by financial activities such as rents and charges collected from car parks and shops within or near the estates. They may vary in scale, and are usually located in the remote or less accessible parts of the territory, but urban expansion has put some of them in the heart of the urban area. Although some units are destined exclusively for rental, some of the flats within each development are earmarked for sale at prices that are lower than for private developments.
Private housing estates usually feature a cluster of high-rise buildings, often with its own shopping centre or market in the case of larger developments. Mei Foo Sun Chuen, built by Mobil, is the earliest (1965) and largest (99 blocks) example of its kind. Since the mid-1990s, private developers have been incorporating leisure facilities including clubhouse facilities,[5] namely swimming pools, tennis courts and function rooms in their more up-market developments. The most recent examples would also have cinemas, dance studios, cigar-rooms.
Uniform high-rise developments may form 'wall effect (Chinese: 屏風效應)', adversely affecting air circulation, causing some controversy.[6] In-fill developments will tend to be done by smaller developers with less capital. These will be smaller in scale, and less prone to the wall effect.
Given the security situation and power shortages in South Asia, 'gated communities' with self-generated energy and modern amenities (24-hour armed security, schools, hospitals, a fire department, retail shopping, restaurants and entertainment centres ) such as Bahria Town and DHA have been developed in all major Pakistani cities. Bahria Town is the largest private housing society in Asia.[7] Bahria has been featured by international magazines and news agencies such as GlobalPost, Newsweek, Los Angeles Times and Emirates 24/7, referred to as the prosperous face of Pakistan.[8][9][10][11] Gated communities in Pakistan are targeted towards upper middle class and upper class, and are mostly immune from problems of law enforcement.
Forms of housing estates may vary in the Czech Republic and Slovakia. During the Communist era of Czechoslovakia, construction of large housing estates (Czech: sídliště, Slovak: sídlisko) was an important part of building plans in the country, as the government wanted to provide large quantities of fast and affordable housing for all people,[12] as well as to slash costs by employing uniform designs over the whole country. They also sought to foster a "collectivistic" in its people.[citation needed]
Most buildings in Czech and Slovak housing estates are the so called paneláks, a colloquial term in Czech and Slovak for a large panel system panel building constructed of pre-fabricated, pre-stressed concrete, such as those extant in the former Czechoslovakia (now the Czech Republic & Slovakia) and elsewhere in the world. Large housing estates of concrete panel buildings (paneláks) now dominate the streets of Prague, Bratislava and other towns. The largest such housing estate in Central Europe can be found in Petržalka (population about 130,000), a part of the Slovak capital of Bratislava.
People living in these housing estates usually own their individual apartments, mainly due to the fact that majority of the individual apartments went from being publicly owned by the state to being privately owned, as they were sold to most apartment occupants by the government for small, symbolic prices after the fall of socialism.[12] People can also rent apartments, usually through real estate agents and private landlords, although some apartments are still owned by the state and are usually used for social housing.[citation needed] There's usually a mix of social classes in these housing estates.[12][13][14]
In Britain and Ireland, housing estates have become prevalent since the Second World War, as a more affluent population demanded larger and more widely spaced houses coupled with the increase of car usage for which terraced streets were unsuitable.
Housing estates were produced by either local authorities (more recently, housing associations) or by private developers. The former tended to be a means of producing public housing leading to monotenure estates full of council houses often known as "council estates". The latter can refer to higher end tract housing for the middle class and even upper middle class.
The problems incurred[clarification needed] by the early attempts at high density tower-block housing turned people away from this style of living. The resulting demand for land has seen many towns and cities increase in size for relatively moderate increases in population. This has been largely at the expense of rural and greenfield land.[citation needed] Recently, there has been some effort to address this problem by banning the development of out-of-town commercial developments and encouraging the reuse of brownfield or previously developed sites for residential building. Nevertheless, the demand for housing continues to rise, and in the UK at least has precipitated a significant housing crisis.
Forms of housing estates in the United States include tract housing, apartment complexes, and public housing.[citation needed]
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A real estate transaction is the process whereby rights in a unit of property (or designated real estate) are transferred between two or more parties, e.g. in the case of conveyance one party being the seller(s) and the other being the buyer(s). It can often be quite complicated due to the complexity of the property rights being transferred, the amount of money being exchanged, and government regulations. Conventions and requirements also vary considerably among different countries of the world and smaller legal entities (jurisdictions).
In more abstract terms, a real estate transaction, like other financial transactions, causes transaction costs. To identify and possibly reduce these transaction costs, the Organisation for Economic Co-operation and Development (OECD) addressed the issue[1] through a study commissioned by the European Commission, [2] and through a research action.[3]
The mentioned research action 'Modelling Real Property Transactions' investigated methods to describe selected transactions formally, to allow for comparisons across countries / jurisdictions. Descriptions were performed both using a more simple format, a Basic Use Case template,[4][5] and more advanced applications of the Unified Modelling Language.[6][7] Process models were compared through an ontology-based methodology,[8] and national property transaction costs were estimated for Finland and Denmark,[9][10][11] based on the directions of the United Nations System of National Accounts.[12]
Real estate transactions: subdivision, conveyance, and mortgaging, as they are performed in the five Nordic countries are described in some detail.[13] A translation into English is available for the Danish part.[14]
The sale of a house in the United States or Canada might involve some or all of the following steps:
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