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Everything You Need to Know About Real Estate

Everything You Need to Know About Real Estate

Real Estate is a big market that is continuously growing. But several people don’t know exactly what it is. For knowing it better, here’s everything you need to know about real estate.

What is Real Estate?

Real estate is the process of buying, owning, and managing real assets such as homes, land, buildings, etc.

Real estate can refer to a wide range of ownership arrangements, such as commercial property, residential property, vacant land, or development land. 

It is also used more broadly to describe the process by which people invest in and buy properties with the aim of reselling them for a profit.

However, the term real estate does not include personal properties which are not attached to the land such as jewelry, vehicles, and furniture.

History of Real Estate

Real estate is an ancient practice that dates back to the beginning of civilization. From the time of the first settlements, the land was a vital resource for all people. As civilizations grew and cities expanded, the need for real estate also increased.

Real estate has continued to evolve over time. Today, it plays a key role in many aspects of our society and economy, from housing and urban development to transportation and construction.

Types of Real Estate Agencies

A real estate agency is basically a business place where the management of selling, buying, or renting took place. 

There are two types of real estate agencies. One that is offered by a construction company to sell their homes, apartments, and other real estates. 

The other type of agency is offered by third-person real estate agents (known as brokers) who bring deals from different sellers while negotiating with the buyer.

  • Tasks of Real Estate Agencies

The real estate agency is obliged to provide an agent who checks all the documentation of both the parties, i.e., seller and buyer. 

From a selling point of view, the agency would help by doing numerous tasks such as listing, marketing, and advertising the property.

From the Buying point of view, the agency would help to review the real estate contracts, research specific details and ensure that the property is not overpriced.

Types of Real Estate Agent

  • Agent

An agent is a licensed individual who helps negotiate and arrange a real estate transaction. In an agency, the seller and the buyer are represented by separate agents. 

Typically, one agent will handle the sale of a property while a second agent will be responsible for finding a buyer. 

In some cases, an agent may also act as a broker between the buyer and seller. This can happen when an agent is acting as an intermediary between parties who do not know each other well. For instance, an agent may represent both parties in case there are any concerns about trust or credibility between them.  

  • Realtor 

A Realtor is a licensed professional and works under trade organization groups including the National Association of Realtors (NAR), the International Association of Real Estate Brokers and Salesmen (IAR), and the American Association of Realtors (AAR). 

As a practicing realtor, they help two types of clients in tandem: buyers and sellers, especially when it comes to selling homes. 

Keeping more authority than real estate agents and brokers, realtors navigate the various aspects of the transaction, such as finding a home, negotiating prices, and getting mortgage financing as well. 

  • Agent of Buyer 

A buyer’s agent is a real estate agent that assists specifically the buyer in the purchase of a home or rental property by acting as an intermediary between the two parties. 

A buyer’s agent negotiates on behalf of the buyer, manages the process of finding a property to buy, and secures the sale or rental contract. 

A buyer’s agent may also arrange inspections, prepare title documents, and assist with closing the transaction. 

Many buyers’ agents are real estate agents but may also work as mortgage brokers, loan officers, financial consultants, or real estate lawyers. Buyers’ agents have access to more tools and resources than sellers’ agents, including the ability to show homes to multiple clients at once. 

The typical commission is between 5% to 6% which is split between the agent of the buyer and the listing agent. And the party who pays this commission is decided in the signed purchase agreement. 

  • Broker  

Brokers are professionals who have completed additional training and licensing required by a typical real estate agent.

Brokers act as a bridge between buyers and sellers or between investors and buyers. They are free to work independently and hire as many real estate agents as required by their brokerage firms. 

Their job purpose remains the same: to find properties for clients, negotiate deals, and close sales when necessary. 

  • Agent of Seller 

As the name suggests, the agent of sellers is the individual who represents the seller in a real estate transaction.

Their main job is finding an appropriate buyer for numerous flat properties when there is a lack of buyer interest.

The agent of sellers may also have several roles in a real estate transaction. For instance, acting as a liaison between the buyer and the seller, helping to arrange inspections and other necessary details. 

In addition, the agent of sellers may handle all of the paperwork associated with a sale, including paperwork related to inspection reports and title transfers. 

Finally, the agent of sellers may be responsible for managing the closing process by distributing keys and organizing last-minute details. 

  • A Dual Agent  

An agent who represents both: themselves and their buyer can be referred to as a “dual agent.” While this term may sound surprising to some, it is actually a common practice. 

There are many reasons why a dual agent can help a homebuyer the most. For example, they can help negotiate the best deal possible with multiple agents involved. They can also make sure that the transaction goes smoothly thanks to their knowledge of both sides of the negotiation process. 

Typically, 10% to 20% of all home sales are proceeded by a dual agent making them more considerable for home sellers and buyers.

In short, dual agents are someone everyone should definitely consider when they’re looking for someone to help you buy or sell a home.

International vs UK real estate

The real estate market in the UK has always been lucrative. It’s the largest or second largest real estate market in Europe depending on the method of measurement you are using.

According to a recent report published by the Global House Price Index, the global real estate housing prices increased with a CAGR (Compound Annual Growth Rate) of 10.2% from last year.

However, the UK real estate housing market performed much better with a CAGR of 12.8% from last year.

Moreover, the real estate market in the UK is expected to grow with a CAGR of 3.56% from 2022-2025, which is a good sign indeed. 

Despite the cooling market around the world, UK real estate performed better and proved itself as a good investment for future players.

Why You Should Avoid Interest Real Estate

Interest is the fee you pay your lender for the privilege of borrowing money. When you take out a mortgage or use an equity loan to buy property, the interest you pay is really a fee that covers the lender’s costs of processing and servicing your loan.

To be clear, this fee is not a tax on you. It’s just a fee that covers the lender’s costs. So, when you pay interest on a real estate loan, that money actually goes to cover the lender’s costs. 

If you don’t pay the lender enough in interest, they’ll end up paying you more in the interest they owe you on top of their processing and service fees. 

This can quickly add up to hundreds or thousands of dollars over your lifetime, which may be enough to make an otherwise smart decision unwise.

Why You Should Avoid Mortgages

It’s very important to understand that a mortgage on real estate is a very high-risk financial decision. It may be the worst investment you can make, especially considering the fact that there’s no guarantee of a steady return on investment. 

For this reason, it’s advisable to avoid mortgages on real estate for as long as possible. If you’re in dire need of money and have no other choice, then you should take out a mortgage.

However, do your research well and find a loan that suits your financial situation. The key is to avoid risk at all costs!

Why You Should Invest in Joint Venture?

The main goal of the joint venture is to create a profitable business that generates revenue and profits for all involved parties. Joint ventures are often used by companies with limited resources, such as large corporations, as an opportunity to leverage their resources and expand their business.

By investing in a joint venture, you can benefit from the expertise of others and access new markets. Also, joint ventures offer you opportunities to work with like-minded individuals or organizations. Finally, when investing in a joint venture, you have the opportunity to shape the direction of the project and grow your network.

The Bottom Line

Real estate is a massive industry. You must be very proficient and professional to compete in the market. 

While you can get help from any type of real estate agent mentioned, you should be careful when financing real estate.

Financing options based on interest and mortgage are always risky and it is not recommended. 

Here comes a great alternative, buying through a joint venture! A joint venture gives you more visibility and protection over the real estate property because it is backed by two or more partners.

However, we can say that real estate works differently and any wrong decision can lead to a heavy loss and financial crisis. Therefore, you have to consider all the discussed things for making real estate more lucrative for you!

Dated 23/08/2022 

DISCLAIMER: The information contained in this article is for general information purposes only. You should not rely upon the information on the website as a basis for making any business, legal or any other decisions.

 

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