Real Estate Brokerage

Forms of specialization

Most newly licensed practitioners choose to begin their real estate careers in residential brokerage.

Primary real estate brokerage activities involve the performance of one or more of the following tasks:

• locating a buyer for a seller
• locating a seller for a buyer
• locating a tenant for a landlord
• locating a landlord for a tenant

A seller, buyer, landlord, or tenant hires a broker to procure the opposite party to the sale or lease transaction. To help get the job done, the broker hires licensed agents as assistants. The brokerage company, in its simplest form, consists of a broker and the broker’s agents, who together work to locate buyers, sellers, tenants, and landlords for the broker’s clients.

In the modern brokerage environment, brokers and agents specialize along the following lines:

• property type
• geographical area
• type of transaction
• type of client
• type of relationship

One’s choice of specialization is influenced by competitive factors in the market and by perceived opportunities.

Property type. Since different properties have different features and potential buyers, brokers commonly choose to specialize in a property type. Thus there are:

• residential agents
• commercial agents (office, retail)
• industrial agents
• land agents

Geographical area. Brokers and agents must maintain current, accurate data on properties. It is not possible to keep track of every property in larger markets. Therefore, one must create an area of geographical specialization. One’s area may be defined by natural barriers; by streets and highways; or by a certain set of subdivisions.

Type of transaction. The principal types of transactions are sales, leases and subleases, exchanges, and options.

Each form of transaction involves particular legal documents and considerations. As a result, many agents, particularly commercial agents, specialize in a type of transaction. For example, in an urban commercial property market, agents generally specialize in either leases or sales.

Type of client. Brokers increasingly represent buyers and tenants as well as sellers and landlords. Since conflicts of interest may be involved, many brokers restrict their business to representing either buyers and tenants or sellers and landlords exclusively.

Some brokers and agents also specialize according to the type of business their clients are in or their motivations for the transaction. Thus one finds brokers who focus exclusively on hospitals, or fast-food chains, or executive relocations.

Type of relationship. In recent years, many brokers have specialized in providing advisory services to clients instead of the traditional transaction-based, commission-compensated services. In the advisory relationship, the broker works on identified real estate tasks or projects in exchange for a fee, salary, or retainer. The fee advisor may or may not focus on completing a transaction.

Some of the individual brokerage services that one might perform for a pre-set fee are:

•  comparative price analysis
•  database search
•  prospect screening
•  site analysis

Skills and knowledge in real estate brokerage:

Knowledge:

• local market conditions
• local properties
• real estate principles
• real estate law
• value estimation
• real estate financing
• investment principles
• license laws
• related math calculations
• closing procedure

Skills:

• financial qualification
• market analysis
• marketing practices
• ethical practices
• liability management
• data management
• selling
• time management
• communication
• writing
• basic computer operation