The Real Estate Brokerage

REAL ESTATE BROKERAGE 

Forms of specialization Additional areas of specialization 

Skills and knowledge 

Most newly licensed practitioners choose to begin their real estate careers in residential brokerage. 

Primary real estate brokerage activities involve performance of one or more of the following tasks: 

 locating a buyer for a seller 

 locating a seller for a buyer 

 locating a tenant for a landlord 

 locating a landlord for a tenant 

A seller, buyer, landlord or tenant hires a broker to procure the opposite party to the sale or lease transaction. To help get the job done, the broker hires licensed agents as assistants. The brokerage company, in its simplest form, consists of a broker and the broker’s agents, who together work to locate buyers, sellers, tenants and landlords for the broker’s clients. 

Forms of 

specialization In the modern brokerage environment, brokers and agents specialize along the following lines: 

 property type 

 geographical area 

 type of transaction 

 type of client 

 type of relationship 

One’s choice of specialization is influenced by competitive factors in the market and by perceived opportunities. 

Property type. Since different properties have different features and potential buyers, brokers commonly choose to specialize in a property type. Thus there are: 

 residential agents 

 commercial agents (office, retail) 

 industrial agents 

 land agents 

Geographical area. Brokers and agents must maintain current, accurate data on properties. It is not possible to keep track of every property in larger markets. Therefore, one must create an area of geographical specialization. One’s area may be defined by natural barriers; by streets and highways; or by a certain set of subdivisions. Section 1: Course Overview: The Real Estate Business 13 

Type of transaction. The principal types of transaction are sales, leases and subleases, exchanges, and options. 

Each form of transaction involves particular legal documents and considerations. As a result, many agents, particularly commercial agents, specialize in a type of transaction. For example, in an urban commercial property market, agents generally specialize in either leases or sales. 

Type of client. Brokers increasingly represent buyers and tenants as well as sellers and landlords. Since conflicts of interest may be involved, many brokers restrict their business to representing either buyers and tenants or sellers and landlords exclusively. 

Some brokers and agents also specialize according to the type of business their clients are in or their motivations for the transaction. Thus one finds brokers who focus exclusively on hospitals, or fast food chains, or executive relocations. 

Type of relationship. In recent years, many brokers have specialized in providing advisory services to clients instead of the traditional transaction-based, commission-compensated services. In the advisory relationship, the broker works on identified real estate tasks or projects in exchange for a fee, salary, or retainer. The fee advisor may or may not focus on completing a transaction. 

Some of the individual brokerage services that one might perform for a pre-set fee are: 

 comparative price analysis 

 database search 

 prospect screening 

 site analysis 

Additional areas of 

Specialization In addition to residential real estate brokerage, there are other areas of specialization a real estate agent may engage in. These include property management, appraising, financing, and counseling. 

Property management. This is a rapidly growing area of real estate due to the growth in “absentee ownership.” Here, the property manager serves as the owner’s agent in controlling the property. Such oversight allows the owner to minimize involvement in the innumerable tasks involved in sustaining income properties. 

Property managers work via an employment contract known as a management agreement. It lays out all the duties the property manager must perform on behalf of the property owner. The management agreement also stipulates how and when the property manager gets compensated. 

Appraising. Appraising is a process of estimating the value of real estate. Certified appraisers are licensed and registered by the Florida Real Estate Appraisal Board. 14 Principles of Real Estate Practice in Florida 

Florida real estate agents are legally authorized per F.S. 475 to appraise property in Florida. However, they must be careful not to represent themselves as an appraiser or their valuation report as a certified appraisal. 

If a real estate agent performs an appraisal, it must follow the laws and guidelines of the Uniform Standards of Professional Appraisal Practices (USPAP). The law also states that a real estate agent may not appraise a property that involves federally-related transactions. 

Instead of appraisals, most real estate agents complete a Comparative Market Analysis (CMA) or a Broker’s Price Opinion (BPO) to determine the approximate value of a piece of property. Both methods are exempt from following the Federal USPAP rules and regulations. These topics will be covered in greater detail in Chapter 16. 

Financing. Financing is the business of providing funds for real estate transactions. The source of funding for most real estate transactions is the mortgage loan. Overall, it is vital for real estate agents to understand financing and be able to solve elementary financing problems. 

Real estate agents do not need to be experts in the field of financing. Loan Mortgage Originators and Mortgage Brokers are licensed to make more sophisticated recommendations and assist the buyer in procuring the funding they need. 

Counseling. Counseling is a very specialized and advanced area of real estate practice. Counselors must know every facet of the real estate business, including property transfers, permitting, subdividing, zoning, and construction. They are hired on a set fee basis because it would be a conflict of interest for them to be paid based on the value of the project. 

Skills and 

knowledge Professionals in the brokerage business must have a broad range of real estate knowledge and skills. Agents must develop a thorough awareness of their local market and the properties within it. In addition, agents must develop a proficiency with the economics of real estate: prices, financing, closing costs, and so forth. Equally important are “people” skills: communicating with clients and responding to their needs. Section 1: Course Overview: The Real Estate Business 15 

Required Skills and Knowledge in Real Estate Brokerage 

Knowledge 

local market conditions 

local properties 

real estate principles 

real estate law 

value estimation 

real estate financing 

investment principles 

license laws 

related math calculations 

closing procedures 

Skills 

financial qualification 

market analysis 

marketing practices 

ethical practices 

liability management 

data management 

selling 

time management 

communication 

writing 

basic computer operation