Chapter 1. Georgia Real Estate An Introduction to the Profession Eighth Edition Chapter 1...

Chapter 1

Georgia Real Estate An Introduction to the Profession

Eighth Edition

Chapter 1

Introduction to Real Estate

Key Terms• broker• independent

contractor• license reciprocity• license revocation• license suspension• licensee

• principal broker• real estate

commission• real estate

salesperson• realtist• REALTOR®• sales associate

© 2015 OnCourse Learning

Overview

Real estate is a unique subject.

No two situations are ever exactly alike.

Overview

Experience has a high correlation with success in this business.

This course combines explanations of the basic principles of real estate along with why things are done and how these principles apply to everyday activities.

How to Use The Textbook• Key terms are listed at the beginning

of each chapter• Additional terms are set in italics

throughout the text• Review questions at the end of each

chapter test you on your comprehension

• Answers are given in Appendix D in the back of the book


Career Opportunities

Residential Brokerage requires a broad knowledge of the community and its neighborhoods; an understanding of real estate principles, law and practice; and an ability to work will with people



Commercial Brokers specialize in income-producing properties such as apartment and office buildings, retail stores and warehouses.

Industrial Brokers specialize in finding suitable land and buildings for industrial concerns.



Farm Brokers handle small farms along with large tracts of land owned by agribusiness corporations.

College training in agriculture is an advantage and on-the-job training is a must.


Career OpportunitiesProperty Managers supervise every aspect of a property’s operations to produce the highest possible financial return over the longest period of time.

A property manager’s tasks include renting, tenant relations, repairs and maintenance, accounting and advertising.



A Real Estate Appraiser gathers and evaluates all available facts affecting a property’s value.

Appraisers in Georgia must be licensed.


Career OpportunitiesDevelopers buy land, build homes and sell them to homeowners and investors. This can be done on a small scale or on a large scale.

Urban Planners work with local governments and civic groups to anticipate future growth and land-use changes.


Career OpportunitiesMortgage Financing specialists can work independently or as an employee:• Mortgage Brokers work

independently. They receive a fee from the borrower for locating a lender.

• Loan Officers work as an employee of a lending institution.



Consulting involves giving others advice about real estate for a fee.

A consultant must have a broad knowledge about real estate.



Investment Opportunities in real estate include:• Apartment buildings• Rental homes• Underpriced properties• Small-scale developer


License Laws & Professional Affiliation

License RequirementsProperty owners who deal only with their own property are not required to hold a real estate license.


License Laws & Professional AffiliationA Real Estate License is required forany person who, for compensation or the promise of compensation, lists or offers to lists, sells or offers to sell, buys or offers to buy, negotiates or offers to negotiate, either directly or indirectly for the purpose of bringing about a sale, purchase or option to purchase, exchange, auction, lease or rental of real estate.© 2015 OnCourse Learning

License Laws & Professional AffiliationRationale for LicensingThe public has a vested interest in seeing that real estate salespersons and brokers have the qualifications of honesty, truthfulness, a good reputation and real estate knowledge before they are allowed to negotiate real estate transactions on behalf of others.



Rationale for LicensingAll 50 states and the District of Columbia require that people who offer their services as real estate agents be licensed.


License Laws & Professional AffiliationLoyalty, Honesty and TruthfulnessThe Georgia Real Estate Commission (GREC) has the power to refuse to issue a license to someone with a past history of dishonesty and untruthfulness.

GREC can also suspend or revoke a license once it has been issued.



Loyalty, Honesty and TruthfulnessAs part of the application process, potential licensees must provide a criminal background check that is no more than 60 days old.



People Required to Be Licensed:• Brokers• Salespeople• Appraisers• Property Managers• Community Association Managers


License Laws & Professional AffiliationPeople Exempt from Being Licensed• Property Owners• Attorneys acting for a client• Trustees, Receivers, Administrators

and Executors acting under a will or trust

• Government employees dealing in real estate


Real Estate Broker

A real estate broker is licensed to act independently in conducting a real estate brokerage business.

A broker can be an actual person or a business firm.

If the broker is a firm, the person in charge must be a broker.


Real Estate Broker

A broker receives a fee, usually a commission, based on the selling price or lease rent.

The broker may represent the buyer or the seller, or both at the same time with full disclosure.


Real Estate Broker

A broker may hire other brokers or salespersons for the purpose of bringing about real estate transactions.


SalespersonA real estate salesperson works for a real estate broker to list and negotiate the sale, lease or rental of real property for others in exchange for compensation, under the direct supervision of an employing broker.

A salesperson cannot operate independently. They must be employed by a broker.


Salesperson

When a salesperson takes a listing, they do so in the name of the broker.

The salesperson is empowered to act on behalf of their broker through an independent agreement with the broker to sign on behalf of the firm.


Sales Associate

A sales associate refers to anyone with a real estate license who is employed by a broker.

Someone who holds a broker’s license can work for another broker. They are licensed as an associate broker.


Qualifications for Licensing

Salesperson Examination• Minimum age is 18 years old• Must complete a 75-hour course• The Georgia Salesperson exam

consists of 152 multiple-choice questions

• A passing grade of 75% or higher is required



Broker Examination• Minimum age is 21 years old• Must be actively licensed for 3 of the

last 5 years• Must complete a 60-hour course• 10 graded computer simulation

exercises



Continuing Education Beginning in July 2015, the continuing education requirement will be 36 hours to renew a license.

Georgia has a four-year license period.


Licensing Procedure

Applied Measurement Professionals (AMP) is the testing provider for GREC: www.goamp.com

Exam cost is $115

Exam locations: Lilburn, Marietta, Savannah and Macon


http://www.goamp.com/

Licensing Procedure

To become licensed, you will need:• $170 certified check or credit card• GCIC Background Report• Notarized Lawful Presence

Verification Document• Sponsoring Broker Form


Licensing ProcedureLicenses must be renewed every 4 years to remain active. The license will lapse if it is not renewed before it expires.

Licenses can be put on inactive status. The license must still be renewed every 4 years, but continuing education is not required until the license is reactivated.


Licensing ProcedureMany states will issue a nonresident license to out-of-state brokers. This is especially helpful when a broker is located near a state border.

Some states will give credit for the national portion of the license exam already taken, requiring only the state portion of the exam.


Licensing Procedure

License Reciprocity is when one state honor’s another state’s license.

Georgia has differing agreements of reciprocity with other states.

Contact the real estate department of the state you are interested in for specific information.


Licensing Procedure

When brokers operate outside of their home state, they may be required to file a notice of consent with the secretary of state. This enables the secretary of state to receive legal summonses on behalf of the nonresident broker.


Licensing the Business Firm

A real estate broker can operate as a sole proprietorship under either the broker’s own name or a fictitious name.

A broker can also operate in partnership with other brokers or as a corporation.



Because a corporation is an artificial being, there must be a qualifying broker who accepts responsibility for the management of the firm.



If the broker has multiple offices, it is not required that those offices have their own qualifying broker. It is required that the company provide adequate supervision.

Each office will typically have a managing broker.


Real Estate Regulation



The state legislature enacts laws addressing the licensing and regulation of real estate brokers and salespersons.

The legislature also establishes the real estate commission.



The real estate commission deals primarily with adopting rules and regulations to implement the license law established by the legislature.

In Georgia, the real estate commission has six members.



Five of the commission members are licensees, the sixth member is a non-licensed member of the general public.

Members are appointed by the Governor and confirmed by the Senate.

The commission meets monthly.


Real Estate RegulationThe commission hires a commissioner to oversee real estate regulation.

The commissioner hires and supervises staff.

Neither the commission nor any commission employee hold an active real estate license.



Real estate commission staff collect fees, issue licenses, investigate alleged malpractices and audit broker trust fund accounts.


License Suspension and RevocationWithout a real estate license, it is unlawful for a person to engage in real estate activities for the purpose of earning a commission or fee.

Unless an agent has a valid license, a court will not uphold an agent’s claim for a commission from a client.


License Suspension and RevocationReasons for license suspension and revocation include:• violation of the state’s real

estate act• misrepresentation• undisclosed dual agency• commingling• acting as an undisclosed

principal© 2015 OnCourse Learning

License Suspension and RevocationLicenses can also be revoked or suspended for:• false advertising• obtaining a license by fraud• failure to account for a client’s funds• practicing law without a license• paying commission to unlicensed

persons• conviction of a felony or certain

misdemeanors© 2015 OnCourse Learning

License Suspension and RevocationWhen the commission receives a complaint from someone regarding a licensee, the staff will conduct an investigation.

If the commission decides to suspend or revoke the respondent’s license, the respondent has the right of appeal to the courts.


Affiliating with a Broker

A salesperson must have a broker to work for before the actual license will be issued.

If you are new to the industry, training and education will be at the top of your list when looking for a broker.



Compensation for salespeople is usually a percentage of the commission they earn for the broker.

How much each receives is open to negotiation between the broker and each salesperson.



Hold interviews with several brokers.

You are interviewing them as much as they are interviewing you.


Affiliating with a BrokerAn Employment Contract must be in writing and must stipulate how the agent will be compensated while they are with the broker and how they will be compensated when they leave the broker on transactions that have been started but not yet completed.

A written agreement is required by Georgia law.


Independent Contractor StatusSales associates act like an independent contractor because the associate it typically paid only if the associate brings about a sale that produces a commission.


Professional Real Estate AssociationsREALTOR® is a registered trade name that belongs to the National Association of REALTORS® (NAR).

It is reserved for the exclusive use of members of the National Association of REALTORS®


Professional Real Estate Associations

One of the most important features of the National Association of REALTORS® is its Code of Ethics.

To be recognized as a REALTOR®, one must observe the ethical standards by which the industry operates.


Professional Real Estate Associations

The National Association of Real Estate Brokers is a national trade association representing minority real estate professionals.

Members use the trade name Realtist.


Review State Laws required to obtain a real estate license.


Chapter 1. Georgia Real Estate An Introduction to the Profession Eighth Edition Chapter 1...

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