Choosing a Buyers Agent

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Real estate is property consisting of land and the buildings on it, along with its natural resources such as growing crops (e.g. timber), minerals or water, and wild animals; immovable property of this nature; an interest vested in this (also) an item of real property, (more generally) buildings or housing in general.^[1][2] In terms of law, real relates to land property and is different from personal property, while estate means the "interest" a person has in that land property.^[3]

Real estate is different from personal property, which is not permanently attached to the land (or comes with the land), such as vehicles, boats, jewelry, furniture, tools, and the rolling stock of a farm and farm animals.

In the United States, the transfer, owning, or acquisition of real estate can be through business corporations, individuals, nonprofit corporations, fiduciaries, or any legal entity as seen within the law of each U.S. state.^[3]

The natural right of a person to own property as a concept can be seen as having roots in Roman law as well as Greek philosophy.^[4] The profession of appraisal can be seen as beginning in England during the 1500s, as agricultural needs required land clearing and land preparation. Textbooks on the subject of surveying began to be written and the term "surveying" was used in England, while the term "appraising" was more used in North America.^[5] Natural law which can be seen as "universal law" was discussed among writers of the 15th and 16th century as it pertained to "property theory" and the inter-state relations dealing with foreign investments and the protection of citizens private property abroad. Natural law can be seen as having an influence in Emerich de Vattel's 1758 treatise The Law of Nations which conceptualized the idea of private property.^[6]

One of the largest initial real estate deals in history known as the "Louisiana Purchase" happened in 1803 when the Louisiana Purchase Treaty was signed. This treaty paved the way for western expansion and made the U.S. the owners of the "Louisiana Territory" as the land was bought from France for fifteen million dollars, making each acre roughly 4 cents.^[7] The oldest real estate brokerage firm was established in 1855 in Chicago, Illinois, and was initially known as "L. D. Olmsted & Co." but is now known as "Baird & Warner".^[8] In 1908, the National Association of Realtors was founded in Chicago and in 1916, the name was changed to the National Association of Real Estate Boards and this was also when the term "realtor" was coined to identify real estate professionals.^[9]

The stock market crash of 1929 and the Great Depression in the U.S. caused a major drop in real estate worth and prices and ultimately resulted in depreciation of 50% for the four years after 1929.^[10] Housing financing in the U.S. was greatly affected by the Banking Act of 1933 and the National Housing Act in 1934 because it allowed for mortgage insurance for home buyers and this system was implemented by the Federal Deposit Insurance as well as the Federal Housing Administration.^[11] In 1938, an amendment was made to the National Housing Act and Fannie Mae, a government agency, was established to serve as a secondary market for mortgages and to give lenders more money in order for new homes to be funded.^[12]

Title VIII of the Civil Rights Act in the U.S., which is also known as the Fair Housing Act, was put into place in 1968 and dealt with the incorporation of African Americans into neighborhoods as the issues of discrimination were analyzed with the renting, buying, and financing of homes.^[13] Internet real estate as a concept began with the first appearance of real estate platforms on the World Wide Web (www) and occurred in 1999.

Residential real estate may contain either a single family or multifamily structure that is available for occupation or for non-business purposes.^[14]

Residences can be classified by and how they are connected to neighbouring residences and land. Different types of housing tenure can be used for the same physical type. For example, connected residences might be owned by a single entity and leased out, or owned separately with an agreement covering the relationship between units and common areas and concerns.^[15]

According to the Congressional Research Service, in 2021, 65% of homes in the U.S. are owned by the occupier.^[16]

Major categories

• Attached / multi-unit dwellings
  • Apartment (American English) or Flat (British English) – An individual unit in a multi-unit building. The boundaries of the apartment are generally defined by a perimeter of locked or lockable doors. Often seen in multi-story apartment buildings.
  • Multi-family house – Often seen in multi-story detached buildings, where each floor is a separate apartment or unit.
  • Terraced house (a.k.a. townhouse or rowhouse) – A number of single or multi-unit buildings in a continuous row with shared walls and no intervening space.
  • Condominium (American English) – A building or complex, similar to apartments, owned by individuals. Common grounds and common areas within the complex are owned and shared jointly. In North America, there are townhouse or rowhouse style condominiums as well. The British equivalent is a block of flats.
  • Housing cooperative (a.k.a. co-op) – A type of multiple ownership in which the residents of a multi-unit housing complex own shares in the cooperative corporation that owns the property, giving each resident the right to occupy a specific apartment or unit. Majority of housing in Indian metro cities are of these types.
  • Tenement – A type of building shared by multiple dwellings, typically with flats or apartments on each floor and with shared entrance stairway access found in Britain.
• Semi-detached dwellings
  • Duplex – Two units with one shared wall.
• Detached dwellings
  • Bungalows
  • Split-level home
  • Mansions
  • Villas
  • Detached house or single-family detached house
  • Cottages
• Portable dwellings
  • Mobile homes, tiny homes, or residential caravans – A full-time residence that can be (although might not in practice be) movable on wheels.
  • Houseboats – A floating home
  • Tents – Usually temporary, with roof and walls consisting only of fabric-like material.

Other categories

• Chawls
• Havelis
• Igloos
• Huts

The size of havelis and chawls is measured in Gaz (square yards), Quila, Marla, Beegha, and acre.

See List of house types for a complete listing of housing types and layouts, real estate trends for shifts in the market, and house or home for more general information.

Real estate can be valued or devalued based on the amount of environmental degradation that has occurred. Environmental degradation can cause extreme health and safety risks. There is a growing demand for the use of site assessments (ESAs) when valuing a property for both private and commercial real estate.^[17]

Environmental surveying is made possible by environmental surveyors who examine the environmental factors present within the development of real estate as well as the impacts that development and real estate has on the environment.

Green development is a concept that has grown since the 1970s with the environmental movement and the World Commission on Environment and Development. Green development examines social and environmental impacts with real estate and building. There are 3 areas of focus, being the environmental responsiveness, resource efficiency, and the sensitivity of cultural and societal aspects. Examples of Green development are green infrastructure, LEED, conservation development, and sustainability developments.

Real estate in itself has been measured as a contributing factor to the rise in green house gases. According to the International Energy Agency, real estate in 2019 was responsible for 39 percent of total emissions worldwide and 11 percent of those emissions were due to the manufacturing of materials used in buildings.^[18]

The Australian property market comprises the trade of land and its permanent fixtures located within Australia. The average Australian property price grew 0.5% per year from 1890 to 1990 after inflation,^[1] however rose from 1990 to 2017 at a faster rate. House prices in Australia receive considerable attention from the media and the Reserve Bank^[2] and some commentators have argued that there is an Australian property bubble.^{[citation needed]}

The residential housing market has seen drastic changes in prices in the past few decades. The property prices are soaring in major cities like Sydney, Melbourne, Adelaide, Perth, Brisbane and Hobart.^[3] The median house price in Sydney peaked at $780,000 in 2016. ^[4] However, with stricter credit policy and reduced interest from foreign investors in residential property, prices have started falling in all the major cities. ^[5] When compared with the soaring prices of 2017, the housing prices fell by 11.1% in Sydney and 7.2% in Melbourne in 2018.^[6] In 2022 the residential rental market has seen a significant increase in rents, which has been described as a ‘rental crisis’.

In 2011 there were 8.6m households with an average household size of 2.6 persons per household.^[7] Freestanding houses have historically comprised most building approvals, but recent data shows a trend towards higher density housing such as townhouses and units.^[8] Turnover rates vary across market cycles, but typically average 6% per year.^[9] Since 1999-2000 the proportion of households renting from state/territory housing authorities has declined from 6% to 3% while the proportion renting privately increased from 20% to 26% in 2019-20.^[10]

The Australian property market is non-uniform, with high variation observed across the major cities and regional areas.^[11]

In Sydney, as of March 2010, the Property Market's vacancy rate reached 0.53% signalling that the market is recovering, as these rates had reached 2% in August 2009. As of July 2015, the Property Market in Sydney has surged in the first Q of 2015, up 3.1%.^[12] Sydney's eastern and northern suburbs typically attract the highest prices, reflecting their desirability and premium location.^[13] The annual capital growth for houses and units in Sydney is 4.2% and 3.8% respectively.^[14]

In the late 2000s, housing prices in Australia, relative to average incomes, were among the highest in the world. As at 2011, house prices were on average six times average household income, compared to four times in 1990.^[15] This prompted speculation that the country was experiencing a real estate bubble, like many other countries.^[16]

Foreign investment has also been identified as a key driver of affordability issues, with recent years seeing particularly high capital inflows from Chinese investors.^[17]

A number of economists, such as Macquarie Bank analyst Rory Robertson, assert that high immigration and the propensity of new arrivals to cluster in the capital cities is exacerbating the nation's housing affordability problem.^[18] According to Robertson, Federal Government policies that fuel demand for housing, such as the currently high levels of immigration, as well as capital gains tax discounts and subsidies to boost fertility, have had a greater impact on housing affordability than land release on urban fringes.^[19]

The Productivity Commission Inquiry Report No. 28 First Home Ownership (2004) also stated, in relation to housing, "that Growth in immigration since the mid-1990s has been an important contributor to underlying demand, particularly in Sydney and Melbourne."^[20] This has been exacerbated by Australian lenders relaxing credit guidelines for temporary residents, allowing them to buy a home with a 10 percent deposit.

The RBA in its submission to the same PC Report also stated "rapid growth in overseas visitors such as students may have boosted demand for rental housing".^[20] However, in question in the report was the statistical coverage of resident population. The "ABS population growth figures omit certain household formation groups – namely, overseas students and business migrants who do not continuously stay for 12 months in Australia."^[20] This statistical omission lead to the admission: "The Commission recognises that the ABS resident population estimates have limitations when used for assessing housing demand. Given the significant influx of foreigners coming to work or study in Australia in recent years, it seems highly likely that short-stay visitor movements may have added to the demand for housing. However, the Commissions are unaware of any research that quantifies the effects."^[20]

Some individuals and interest groups have also argued that immigration causes overburdened infrastructure.^[21][22]

In December 2008, the federal government introduced legislation relaxing rules for foreign buyers of Australian property. According to FIRB (Foreign Investment Review Board) data released in August 2009, foreign investment in Australian real estate had increased by more than 30% year to date. One agent said that "overseas investors buy them to land bank, not to rent them out. The houses just sit vacant because they are after capital growth."^[23]

Australian property investors often apply the practice of negative gearing. This occurs when the investor borrows money to fund the purchase of the property, and the income generated by the property is less than the cost of owning and managing the property including interest.^[24] The investor is expecting that capital gains will compensate for the shortfall. Negative gearing receives considerable media and political attention due to the perceived distortion it creates on residential property prices. In anticipation of Labor being elected in the 2019 federal election, the banks issued less interest only loans which are used by many investors for negative gearing.^[25]

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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]

Flat-fee real estate agents charge a seller of a property a flat fee, $500 for example,^[11] as opposed to a traditional or full-service real estate agent who charges a percentage of the sale price. In exchange, the seller's property will appear in the multiple listing service (MLS), but the seller will represent him or herself when showing the property and negotiating a sales price.^[11] The result is the seller pays less commission overall (roughly half) when the property sells.^[11] This is because a seller will pay a percentage of the sales price to a buyer's agent but not have to pay a percentage to a seller's agent (because there isn't one; the seller is representing himself).

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 4 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.

• The National Association of Realtors (NAR)
  • The Realtor Political Action Committee (RPAC) is the lobbying arm of the NAR.
• The National Association of Real Estate Brokers (NAREB)
• The Real Estate Institute of Canada (REIC)^[21][22]
• The Real Estate Roundtable^[23]

• Alice Mason^[24]

• Media related to Real estate agents at Wikimedia Commons