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REAL ESTATE FUNDAMENTALS

A training on how we can understand our job and goals as we lend a helping hand along the way
REAL ESTATE
Real estate is real property that consists of land
and improvements, which include buildings,
fixtures, roads, structures, and utility systems.
Property rights give a title of ownership to the
land, improvements, and natural resources such
as minerals, plants, animals, water, etc.
 What is the definition of Real Estate?

Here’s an example to help you understand real estate’s meaning-

If you own a plot of land, even with nothing on it, by definition, that
is real estate. If you own an apartment complex, by definition, the
building and the land it is on is the real estate.

In legal terms, the meaning of real estate is property and all of its
“real” and “fixed” components. Portable and personal property do
not count as real estate even if it is on a real estate property.
 Permanent improvements and features inseparable from
the land, natural or man made, are defined as a part of
the real estate. Fences, gardens, driveways, sheds,
garages, and other kinds of permanent features count as
What parts of a a part of the “real property.” Also, streams, trees.
property aren’t
Personal property can be on real estate, but is not
considered real considered a part of it. Personal property is anything that
estate? is not permanently attached to the land. This includes
furniture, vehicles, farm equipment, and the like.

If you visit a home that is furnished and you intend to

buy, expect that the furniture is not a part of the deal. If
you’re buying a farm from a landowner and think the
tractor or the animals are a part of the deal you’d better
talk to that farmer about it before signing any
paperwork.
Types of
Real Estate
 TYPES OF REAL ESTATE

Land Residential Commercial

Land is the baseline for all types of real property. Residential real estate consists of housing for Commercial property refers to land and buildings
Land typically refers to undeveloped property and individuals, families, or groups of people. This is that are used by businesses to carry out their
vacant land. Developers acquire land and the most common type of estate and is the operations. Examples include shopping malls,
combine it with other properties (called *asset class that most people are familiar with. individual stores, office buildings, parking lots,
assembly) and rezone it so they can increase the Within residential, there are single-family homes, medical centers, and hotels.
density and increase the value of the property. apartments, condominiums, townhouses, and
other types of living arrangements.

Industrial
Industrial real estate refers to land and buildings
that are used by industrial businesses for
activities such as factories, mechanical
productions, research and development,
construction, transportation, logistics, and
warehousing.
Now that we’ve outlined the four main categories,

EXAMPLES OF REAL ESTATE

let’s explore some specific examples of different
types of real property.
Single-family dwelling – Any home designed for only one family
Multi-family dwelling – Any group of homes designed for more than one family
Attached/Townhome – Any unit that’s connected to another (not freestanding)
Apartment – 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.
Condominium (Condo) – A building with individual units owned by individual people.
Residential Detached house – A free-standing building not connecting to anything else
(a stereotypical “home”)
Modular Home - A modular building is a prefabricated building that consists of repeated
sections called modules.
Mobile home – A vehicle on wheels that has a permanent residence attached to it
 Overview of Real Estate Industry
Let’s explore how the industry works and what the major jobs and careers are.

The real estate industry can be divided into several different areas:

Development - Real estate development is a process that involves the purchase of raw land, rezoning, construction and renovation of
buildings, and sale or lease of the finished product to end users. Developers earn a profit by adding value to the land (creating buildings or
improvements, rezoning, etc.) and taking the risk of financing a project. Development firms create a new product, which can be thought of
as the “primary market” or generation of new inventory.

Sales and marketing - Sales and marketing firms work with developers to sell the buildings and units they create. These firms earn a
commission for creating all marketing material and using their sales agents to sell the inventory of completed units. These firms typically
focus on new units.

Brokerage - A real estate brokerage is a firm that employs a team of real state agents (realtors) who help facilitate a transaction between
the buyers and sellers of property. Their job is to represent either party and help them achieve a purchase or sale with the best possible
terms.

Property management - Property management firms help real estate owners rent out the units in their buildings. Their jobs include collecting
rent, showing units, fixing deficiencies, performing repairs, and managing tenants. They charge a fee, typically a percentage of the rent, to
property owners.

Lending - Lenders play a major role in the industry as virtually all properties and developments use leverage (debt) to finance their
business. Lenders can include banks, credit unions, private lenders, and government institutions.

Professional services (law, accounting, etc.) - There are a variety of real estate professionals who work in the industry and help make it
function. The most common examples (other than the ones listed above) are accountants, lawyers, interior designers, stagers, general
contractors, construction workers, and tradespeople.
 Real estate business is one of the biggest, most
lucrative businesses. It can be broadly

What is a Real categorized into four main categories:

commercial, residential, industrial, and land. A
real estate business can operate in all of these
Estate Business? categories, or just one or two.
A real estate business, is made up of:

Material supplier
Builder
Building Labor Supplier
Architect
Engineer
Construction
Equipment provider
Financer
Or a Home Realtor

All of these professionals come together to create and

establish the vibrant real estate business.

One especially key attribute of real estate businesses

are the real estate agents and brokers who handle
clients in the transaction processes providing advice,
information, arranging property tours and helping to
negotiate deals.
What Typical Market listings (through a Multiple Listing Service or
Commercial Information Exchange)
Real Estate Real estate agents and Real estate brokers
Banks (such as bank real estate owned
Businesses departments for REO’s and short sales)

Acquire as Government entities (such as government

agencies)
Investment Public auction (foreclosure sales, estate sales,
etc.)
Properties: Private sales (transactions for sale by owner)
Real estate wholesalers and investors (flipping)
 Analyst – Performing financial analysis and valuation of properties
Appraiser – Valuing properties
Agent – a sales agent or “realtor”
Building Inspector – Someone who examines buildings and works with
appraisers
Commercial Broker – An agent who sells commercial properties
Director of Real Estate – A corporate job
Home Inspector – Someone hired to assess the quality of a home for a
seller or purchaser
Loan Underwriter – A person who analyzes the creditworthiness of a
borrower
Mortgage Specialist / Underwriter – A person who approves mortgage
applications
Real Estate Attorney – A lawyer who specializes in real estate
transactions

Careers in
Real Estate
 If you're an EVO ISA...
There's a good chance you'll work with a real
estate agent, broker, or Realtor. Though all of
these real estate pros are licensed to help you
buy, sell, or rent a home, they are distinct from
one another, especially when it comes to their
qualifications and which rung of the professional
ladder they occupy.

It’s a win-win situation.

Real Estate Agent vs. Realtor We owe a lot to our

environment. We need

vs. Broker
to give back while
keeping our legacy and
promise for our clients.
Real Estate Agent
Agents who represent sellers are called listing
What does a real estate agent do? agents. These agents help set listing prices,
Real estate agents are individuals who are suggest home updates that will increase the
licensed to help people buy, sell, and rent real Real estate agents organize transactions
home's value (and the chance of a successful
estate. They are ultimately responsible for between buyers and sellers, as well as those
sale), help with home staging, and market the
bringing buyers and sellers together and are paid between owners and renters. Agents are
home via the local Multiple Listing Service (MLS)
a commission—usually a percentage of the responsible for carrying offers and counteroffers
and other channels. They also negotiate sales
property's sale price. Real estate agents are also between each party, along with any queries they
prices closing costs and other fees and help
called real estate associates and real estate may have. An agent will work with another agent
prepare, submit, and file documents.
salespeople. when an offer is accepted, guiding clients through
the process of filling out paperwork. They also
Agents who represent buyers are known as
make sure their clients are fully aware of any
buyer's agents. These agents find properties that
requirements to complete the sale including
match the buyer's requirements (aka the "wish
home inspections, moving, and important dates
list") and price range and help arrange home
such as the closing.
appraisals and inspections. Like listing agents,
buyer's agents negotiate terms and help prepare,
submit, and file the necessary documents.

How do real estate agents get

paid?
tip
Real estate agents work for brokers or agencies
Agents can act as both listing and buyer's agents, and are normally paid on a commission basis.
though typically not for the same transaction This means they receive a percentage of the sale
because that can create a conflict of interest. price of a property—so, the higher the sale price,
the higher the commission.
 Types of Real Estate
Agents
Listing Agent
There are several types of real estate
agents—each with unique
responsibilities and specializations. A listing agent represents a homeowner during the sale of their home
Although you can specialize as a and negotiates to get the maximum value
listing agent or buyer’s agent, it’s not
necessary. In most cases, a real
estate agent can work with buyers
and sellers, so they will have
Buyer's Agent
opportunities to be a buyer’s agent,
listing agent, dual agent, or Buyer’s agents represent homebuyers in their search for a new home,
transaction agent multiple times guiding them through to get the best home at the most ideal price.
throughout their career.

Dual Agent
A dual agent represents both the buyer and seller in a single real
estate transaction.

Transaction Agent
When a buyer does not work with a real estate agent, the listing agent
can act as a transaction agent to write the offer for them.
Realtor

A Realtor is a real estate agent who is an active

member of the National Association of Realtors
Agents can also become Realtors, active and
(NAR). Founded in 1908, the NAR is the largest
paying members of the National Association of
trade association in the United States. Active real
Realtors (NAR). In this sense, there is generally no
estate agents who would like to join the
difference between real estate agents and
organization must have a valid real estate license
Realtors, other than distinguishing between
and an immaculate professional conduct record.
members and non-members of the NAR when it
Real estate agents have an incentive to join due
comes to professional duties.
to its good reputation, attracting more clients.

All Realtors are required to adhere to an

extensive Code of Ethics, so consumers may feel
at ease knowing that they are working with
agents who are thoroughly vetted and have
sworn to uphold certain professional standards.
 Real Estate Broker

A real estate broker is a real estate agent who Responsibilities of Real Estate How Do Brokers Earn Money?
continues their education and successfully
Agents vs Brokers Real estate brokers earn money through
receives a state real estate broker license. Unlike
real estate agents, brokers can work The main difference between real estate agents commission, either as a portion of an agent’s deal
independently and start their own brokerage and and brokers is that only a broker can own real or their own deals. The real estate agents that
hire other real estate agents. estate firms or manage agents. If you’re an agent, work underneath them are required to split the
you’ll work under a sponsoring broker and focus commission with each transaction. Brokers can
on your work with buyers and sellers. Brokers can then increase the amount of income they can
do the same tasks, but also handle contracts, make by closing their own deals and earning
marketing, property management, and training. commission they are not required to split with the
rest of the team.

Benefits of Being a Real Estate Bottom line

Broker vs an Agent Real estate brokers have more experience,
undergo more training, and make more money
1. Real Estate Brokers Can Run Their Own than real estate agents. They are also the only
Brokerage real estate professionals who can open their own
2. Real Estate Brokers Earn a Higher Income brokerage or property management firm.
3. Real Estate Brokers Have Better Commission However, agents have fewer licensing
Splits requirements and don’t have financial
4. Real Estate Brokers Can Run Property responsibility for other agents. Consider
Management Companies upgrading to a broker’s license if you want to start
5. Real Estate Brokers Can Leverage Their your own brokerage, make more money, or
Experience in Marketing manage properties.
 A broker is a professional who has
taken additional education and has
passed a special broker’s licensing
exam. Although broker exams differ Designated Broker
from state to state, the coursework
covers in-depth legal issues, operating
brokerages, investments, construction, Almost every real estate office has a designated broker who ensures
and property management. Real estate the agents are following real estate law. The designated or principal
agents are often required to practice broker is responsible for making sure operations comply. They are
for several years before they can take
paid a commission on top of a base salary.
the broker’s exam. Brokers are
responsible for managing real estate
firms and their agents, ensuring legal
compliance, and reviewing contracts. Associate Broker
There are three main types of real
estate brokers: Associate brokers work under designated brokers to help with real
estate law. They do not, however, oversee real estate agents or
Realtors directly.

Managing Broker
Managing brokers are in charge of the day-to-day operations at real
estate firms, such as managing and hiring agents. In some offices,
managing brokers also manage the administrative work.
KEY
TAKEAWAYS
Real estate agents have a
professional license to help people
buy, sell, and rent real estate. They
must work for a sponsoring broker or
brokerage firm.
Brokers are real estate agents who
have completed additional training
and licensing requirements. They can
work independently and hire other
real estate agents to work for them.
A Realtor is a licensed real estate
agent or broker (or other real estate
professional) who is a member of
the National Association of Realtors
(NAR). Members must comply with
NAR's strict Code of Ethics.
Thank you!