Real Estate FAQ
Q: What is the definition of Real Estate?
A: Real Estate is "immoveable" property, as in buildings or land. Generally, real estate has to do with the buying and selling of homes, corporate offices, housing facilities, land for development, and other kinds of general property.
Q: What is the difference between Commercial Real Estate and Residential Real Estate?
A: Commercial real estate is buying and selling buildings and land for corporate complexes, such as office building, apartment complexes, or storage facilities. Residential real estate is the buying and selling of houses.
Q: Do I need a license to buy and sell real estate?
A: If it is your own property, no. If it is someone else's property, yes. It is illegal to receive remuneration (percentage commission) for the sale of property without a license.
Q: What is the difference between a Real Estate Agent, a Real Estate Broker, a Real Estate Lawyer, and a Realtor?
A: A real estate agent is a sales person who helps a seller sell property for the highest price possible. However, real estate agents can also be hired by home buyers under contract to negotiate the lowest price possible for the buyer. In order for real estate agents to assist sellers and buyers in property transactions, they must obtain a real estate license in the state where they practice. Obtaining a license usually requires some specific education courses in addition to passing the state licensing exam.
Real estate agents are called real estate brokers in some states, but generally there are two levels of real estate agency. Once a real estate salesperson has passed the exam, a real estate agent must become associated with the second level "broker" or brokerage in order to work. After several years of experience, a real estate agent can achieve his or her own brokerage through additional education and/or exams as required by state law.
A real estate lawyer is an attorney who is granted real estate broker status through his or her law degree, thereby sometimes waves the real estate exam requirement.
A Realtor is a real estate agent or broker who has been recognized by NAR, the National Association of Realtors.
Q: What is the NAR?
A: NAR is a trade association representing over 1 million realtors. The term "realtor" is trademarked by NAR to refer to a real estate agent with NAR membership. Realtors are pledged to a code of ethics and Standards of Practice.
Q: What is depreciation?
A: In real estate, depreciation is when the value of property lowers over time due to changes in the market.
Q: What is Escrow?
A: When you purchase a piece of property, escrow is opened. Escrow is the amount you owe a third party that holds the deed to your property until you can pay it off.
Q: What is Mortgage?
A: Mortgage is a loan taken out on real estate. Essentially, it is the debt, or amount you owe, on a piece of property.
Q: What is Equity?
A: Equity is what a piece of property is worth once you subtract how much is owed in current loan balances. In real estate, this translates to how much a piece of property is worth after debt as been paid in addition to seller's costs.
Q: What is a "Fund of Funds" Company?
A: A "fund of funds" company is a company that invests in another company. In real estate, this is a company that "backs" another company financially to acquire, manage, and lease real estate properties.
Q: What is a Bull Market?
A: A bull market is when stock prices have increased for an extended period of time. In a bull market, investors refuse to sell because they believe that stock prices are going to continue to go up. In a bull market, the number of buyers outweighs the number of sellers. In real estate, this translates to a great many people wanting to invest in real estate.
Q: What is a Bear Market?
A: A bear marker is when stock prices have decreased for an extended period of time. In a bear market, investors refuse to buy because they believe stock prices are going to continue to fall. In real estate, this translates to high property prices and people refusing to buy or sell because they fear they will lose money on their investment.
Q: What is REIT and why does it matter?
A: REIT is similar to a mutual fund for stocks. It stands for real estate investment trust and it is a tax designation that allows corporations investing in real estate to reduce corporate income taxes. Real Estate companies like Mack-Cali are REIN companies.
Q: What is Respa?
A: Respa is the Real Estate Settlement Procedures Act passed by Congress in 1974. Respa was signed into law to prevent lenders, realtors, and title insurance companies from inflating prices through undisclosed percentage fees.
Q: What is Conveyance?
A: Conveyance is the act of transferring the title of a property from one party to another.
Resources to other FAQs for additional information:
Read an FAQ geared toward first time buyers.
Read a comprehensive FAQ on Commercial Real Estate at Lawyers.com.
Read an FAQ specifically geared for Real Estate Buyers of waterfront property.
Read an FAQ on Real Estate and Mortgage Resources that gives detailed answers to complicated questions.
Read a FAQ about Real Estate investment on buying a home, investment trust, and renting vs buying.
Thinking about a career in Real Estate? Read the FAQ on the Licensing Exam.
Read an FAQ on Real Estate licensing forms.
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