Real estate business

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Real estate business is the profession of buying, selling, managing or renting real estate (land, buildings, or housing). [1]

Contents

Sales and marketing

It is common practice for an intermediary to provide real estate owners with dedicated sales and marketing support in exchange for commission. In North America, this intermediary is referred to as a real estate agent, real estate broker or realtor; whilst in the United Kingdom, the intermediary would be referred to as an estate agent. In Australia, they are known as real estate agents, real estate representatives, or simply the agents. [2]

There have been various studies to detect the determinants of housing prices to this day, mostly trying to examine the impacts of structural, locational and environmental attributes of houses. [3]

Transactions

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 among 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 [4] through a study commissioned by the European Commission [5] and through a research action. [6]

The mentioned research action ‘Modelling Real Property Transactions’ investigated methods to describe selected transactions in a formal way to allow for comparisons across countries and jurisdictions. Descriptions were performed both using a more simple format, a Basic Use Case template, [7] [8] and more advanced applications of the Unified Modelling Language. [9] [10] Process models were compared through an ontology-based methodology, [11] and national property transaction costs were estimated for Finland and Denmark [12] [13] [14] based on the directions of the United Nations System of National Accounts. [15]

Real estate transactions: subdivision, conveyance, and mortgaging, as they are performed in the five Nordic countries, are described in some detail. [16] A translation into English is available for the Danish part. [17]

See also

Related Research Articles

In law, conveyancing is the transfer of legal title of real property from one person to another, or the granting of an encumbrance such as a mortgage or a lien. A typical conveyancing transaction has two major phases: the exchange of contracts and completion.

An escrow is a contractual arrangement in which a third party receives and disburses money or property for the primary transacting parties, with the disbursement dependent on conditions agreed to by the transacting parties. Examples include an account established by a broker for holding funds on behalf of the broker's principal or some other person until the consummation or termination of a transaction; or, a trust account held in the borrower's name to pay obligations such as property taxes and insurance premiums. The word derives from the Old French word escroue, meaning a scrap of paper or a scroll of parchment; this indicated the deed that a third party held until a transaction was completed.

This aims to be a complete list of the articles on real estate.

<span class="mw-page-title-main">Real estate agent</span> Person who acts as an intermediary between sellers and buyers of real estate for a commission

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. Brokers and agents are licensed by the state to negotiate sales agreements and manage the documentation required for closing real estate transactions.

Title insurance is a form of indemnity insurance, predominantly found in the United States and Canada, that insures against financial loss from defects in title to real property and from the invalidity or unenforceability of mortgage loans. Unlike some land registration systems in countries outside the United States, US states' recorders of deeds generally do not guarantee indefeasible title to those recorded titles. Title insurance will defend against a lawsuit attacking the title or reimburse the insured for the actual monetary loss incurred up to the dollar amount of insurance provided by the policy.

Stamp duty is a tax that is levied on single property purchases or documents. A physical revenue stamp had to be attached to or impressed upon the document to show that stamp duty had been paid before the document was legally effective. More modern versions of the tax no longer require an actual stamp.

Real estate appraisal, property valuation or land valuation is the process of assessing the value of real property. Real estate transactions often require appraisals because every property has unique characteristics. The location also plays a key role in valuation. Appraisal reports form the basis for mortgage loans, settling estates and divorces, taxation, and so on. Sometimes an appraisal report is used to establish a sale price for a property.

<span class="mw-page-title-main">Real estate economics</span> Application of economic techniques to real estate markets

Real estate economics is the application of economic techniques to real estate markets. It aims to describe and predict economic patterns of supply and demand. The closely related field of housing economics is narrower in scope, concentrating on residential real estate markets, while the research on real estate trends focuses on the business and structural changes affecting the industry. Both draw on partial equilibrium analysis, urban economics, spatial economics, basic and extensive research, surveys, and finance.

<span class="mw-page-title-main">Cadastre</span> Comprehensive register of the real estate or real propertys metes-and-bounds of a country

A cadastre or cadaster is a comprehensive recording of the real estate or real property's metes-and-bounds of a country. Often it is represented graphically in a cadastral map.

Closing costs are fees paid at the closing of a real estate transaction. This point in time called the closing is when the title to the property is conveyed (transferred) to the buyer. Closing costs are incurred by either the buyer or the seller.

<span class="mw-page-title-main">Commercial property</span> Buildings or land intended to generate a profit, either from capital gain or rental income

Commercial property, also called commercial real estate, investment property or income property, is real estate intended to generate a profit, either from capital gains or rental income. Commercial property includes office buildings, medical centers, hotels, malls, retail stores, multifamily housing buildings, farm land, warehouses, and garages. In many U.S. states, residential property containing more than a certain number of units qualifies as commercial property for borrowing and tax purposes.

<span class="mw-page-title-main">Real Estate Settlement Procedures Act</span> US law protecting homeowners

The Real Estate Settlement Procedures Act (RESPA) was a law passed by the United States Congress in 1974 and codified as Title 12, Chapter 27 of the United States Code, 12 U.S.C. §§ 2601–2617. The main objective was to protect homeowners by assisting them in becoming better educated while shopping for real estate services, and eliminating kickbacks and referral fees which add unnecessary costs to settlement services. RESPA requires lenders and others involved in mortgage lending to provide borrowers with pertinent and timely disclosures regarding the nature and costs of a real estate settlement process. RESPA was also designed to prohibit potentially abusive practices such as kickbacks and referral fees, the practice of dual tracking, and imposes limitations on the use of escrow accounts.

Under Section 1031 of the United States Internal Revenue Code, a taxpayer may defer recognition of capital gains and related federal income tax liability on the exchange of certain types of property, a process known as a 1031 exchange. In 1979, this treatment was expanded by the courts to include non-simultaneous sale and purchase of real estate, a process sometimes called a Starker exchange.

<span class="mw-page-title-main">House price index</span> Measure of the price changes of residential housing

A house price index (HPI) measures the price changes of residential housing as a percentage change from some specific start date. Methodologies commonly used to calculate an HPI are hedonic regression (HR), simple moving average (SMA), and repeat-sales regression (RSR).

Mortgage fraud refers to an intentional misstatement, misrepresentation, or omission of information relied upon by an underwriter or lender to fund, purchase, or insure a loan secured by real property.

<span class="mw-page-title-main">Mortgage</span> Loan secured using real estate

A mortgage loan or simply mortgage, in civil law jurisdictions known also as a hypothec loan, is a loan used either by purchasers of real property to raise funds to buy real estate, or by existing property owners to raise funds for any purpose while putting a lien on the property being mortgaged. The loan is "secured" on the borrower's property through a process known as mortgage origination. This means that a legal mechanism is put into place which allows the lender to take possession and sell the secured property to pay off the loan in the event the borrower defaults on the loan or otherwise fails to abide by its terms. The word mortgage is derived from a Law French term used in Britain in the Middle Ages meaning "death pledge" and refers to the pledge ending (dying) when either the obligation is fulfilled or the property is taken through foreclosure. A mortgage can also be described as "a borrower giving consideration in the form of a collateral for a benefit (loan)".

A real estate transaction is the process whereby rights in a unit of property 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).

A real estate derivative is a financial instrument whose value is based on the price of real estate. The core uses for real estate derivatives are: hedging positions, pre-investing assets and re-allocating a portfolio. The major products within real estate derivatives are: swaps, futures contracts, options and structured products. Each of these products can use a different real estate index. Further, each property type and region can be used as a reference point for any real estate derivative.

<span class="mw-page-title-main">HUD-1 Settlement Statement</span> Mortgage lending form

The HUD-1 Settlement Statement is a standardized mortgage lending form in use in the United States of America on which creditors or their closing agents itemize all charges imposed on buyers and sellers in consumer credit mortgage transactions. The HUD-1 is used primarily for reverse mortgages and mortgage refinance transactions. The reference to 'HUD' in the form's name refers to the Department of Housing and Urban Development.

In consumer lending, mortgage origination, a specialized subset of loan origination, is the process by which a lender works with a borrower to complete a mortgage transaction, resulting in a mortgage loan. A mortgage loan is a loan in which property or real estate is used as collateral. During this process, borrowers must submit various types of financial information and documentation to a mortgage lender, including tax returns, payment history, credit card information and bank balances. Mortgage lenders use this information to determine the type of loan and the interest rate for which the borrower is eligible. The process in the United States has become complex due to the proliferation of loan products and consumer protection regulations.

References

  1. ↑ "Real estate": Oxford English Dictionary online: Retrieved September 18, 2011
  2. ↑ "Glossary of Terms". Real Estate Institute of Australia (REIA). Retrieved 25 March 2018.
  3. ↑ Annamoradnejad, Rahimberdi; Annamoradnejad, Issa; Safarrad, Taher; Habibi, Jafar (2019). "Using Web Mining in the Analysis of Housing Prices: A Case study of Tehran". 2019 5th International Conference on Web Research (ICWR). Tehran, Iran: IEEE. pp. 55–60. doi:10.1109/ICWR.2019.8765250. ISBN   9781728114316. S2CID   198146435.
  4. ↑ "Improving Competition in Real Estate Transactions, 2007". Oecd.org. Retrieved 3 January 2012.
  5. ↑ "Conveyancing Services Market, 2007". Europa (web portal). Retrieved 3 January 2012.
  6. ↑ "Modelling Real Property Transactions, 2001–2005". Cost.esf.org. Retrieved 3 January 2012.
  7. ↑ "Alistair A.R. Cockburn: Basic use case template". Alistair.cockburn.us. Retrieved 3 January 2012.
  8. ↑ Default. "WG Law and Modelling: UseCase descriptions of Subdivision Procedures, 2002". Costg9.plan.aau.dk. Retrieved 3 January 2012.
  9. ↑ "Ferlan, Sumrada and Mattsson: Modelling property transactions, pp. 27 – 79 in: Real Property Transactions. Procedures, Transaction Costs and Models. Edited by: J. Zevenbergen, A. Frank and E. Stubkjær". Iospress.nl. January 2008. Retrieved 3 January 2012.
  10. ↑ "Rados Sumrada: Modeling methodology for real estate transactions, 2005" . Retrieved 3 January 2012.
  11. ↑ "Hess and Vaskovich: Ontology Engineering for Comparing Property Transactions, pp. 183 – 201, and Hess and Schlieder: Ontology-Based Development of Reference Processes, pp. 203- 219, both in: Real Property Transactions. Procedures, Transaction Costs and Models. Edited by: J. Zevenbergen, A. Frank and E. Stubkjær". Iospress.nl. January 2008. Retrieved 3 January 2012.
  12. ↑ "Vitikainen: Transaction Costs Concerning Real Property – The Case of Finland, pp. 101 – 118 in: Real Property Transactions. Procedures, Transaction Costs and Models. Edited by: J. Zevenbergen, A. Frank and E. Stubkjær". Iospress.nl. January 2008. Retrieved 3 January 2012.
  13. ↑ "Stubkjær: Accounting Costs of Transactions in Real Estate – The Case of Denmark. Nordic Journal of Surveying and Real Estate Research, 2:1 (2005) 11–36". mts.fgi.fi. Archived from the original on 5 February 2009.{{cite news}}: CS1 maint: unfit URL (link)
  14. ↑ "Stubkjær, Lavrac and Gysting: Towards national real estate accounts: The case of Denmark and other European jurisdictions, pp. 119- 139 in: Real Property Transactions. Procedures, Transaction Costs and Models. Edited by: J. Zevenbergen, A. Frank and E. Stubkjær". Iospress.nl. January 2008. Retrieved 3 January 2012.
  15. ↑ "UN System of National Accounts 1993". mts.fgi.fi. Archived from the original on 13 August 2010.
  16. ↑ "Ejendomsregistrering i de nordiske lande" (PDF). Archived from the original (PDF) on 13 June 2007. Retrieved 17 February 2018.
  17. ↑ "Property formation in the Nordic countries – Denmark. National Survey and Cadastre (2008)" (PDF).
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