The real estate industry is essentially a service business. There is no product to manufacture, assemble, or sell. The current or prospective owner of a property employs or contracts professionals to perform various functions, including real estate sales, management, development, leasing, and appraising. The types of properties handled by real estate professionals include houses, condominiums, apartments, farms, vacant land, office buildings, stores, shopping centers, warehouses, factories, and other industrial properties.
Upon deciding to sell a property, the owner usually contacts a local real estate agent. The owner and agent discuss the price at which the property is to be offered, the plans for advertising and creating interest in the property, and the terms under which the owner will sell. The owner then commonly gives the real estate firm a contract authorizing it as the agent for a certain period of time (several months) in trying to find a buyer for the property.
Selling real estate requires the ability to price property accurately, devise and use imaginative sales and advertising methods, and deal capably with prospective buyers. Good real estate agents, for instance, develop a knowledge of the neighborhoods they serve; they know the taxes, the schools, and the value of different locations. In selling homes, good agents know the houses extremely well, both their strengths and weaknesses. For instance, they know how much it costs to heat a given house per year, the amount of taxes paid monthly, and the age and condition of the structure.
Some real estate agents specialize in specific types of property. These agents must be particularly knowledgeable in their specialties. For example, agricultural real estate agents deal with rural properties and must know a great deal about the types of soil, the water supply and drainage, and the cost of labor in the area.
Industrial real estate also demands special knowledge from real estate brokers and agents. A successful industrial broker must know about the needs of different types of industries in order to find a suitable buyer for a property. The broker should know about transportation facilities; labor forces; local building, zoning, and tax laws; and factors such as housing, parks, and school facilities for the potential employer's employees.
Real estate agents also may be involved in the sale or development of industrial parks, which are large areas designated for industrial use. Another example of land development is housing developments, which can be just one block of houses or an entire community with shopping centers, schools, and police and fire protection facilities.
Land development requires a broad knowledge of all phases of real estate: financing, construction, appraisal, leasing, and management. The developer's first step is selecting the site and buying the necessary tracts of land. Usually, after borrowing money to finance the building, the developer engages a contractor to build houses or other buildings. A real estate broker hired by the developer or through the developer's own real estate business puts the buildings up for sale.
Another branch of real estate involves building management. Real estate management is concerned with representing the owner in maintaining the property, paying operating expenses, and directing the work of the building employees. Real estate managers must account to the owner each month concerning these activities.
Owners of office buildings, apartments, shopping centers, and other types of income-producing real estate generally hire a real estate firm to manage their property, although sometimes the manager is an individual working for the owner. The managing agent often acts as a leasing agent on behalf of the owner and must have sufficient knowledge of rental market conditions and rent control laws to attain the highest degree of occupancy as well as the largest income for the property.
A leasing agent is responsible for representing the property owner in leasing the units of a property, collecting rent, and paying operating expenses. Leasing procedures differ somewhat according to whether the property is new and being leased for the first time or whether it is an existing property with previous or existing leases. New properties require careful analysis by the agent to ensure that the rent will represent an accurate estimate of the market. Owners want to obtain the highest possible rents, but it is also essential that the property rent quickly without long exposure to the market.
The leasing agent uses advertising, open houses, personal calls to potential tenants, and other sales devices in the process of leasing a new property. The same sales techniques are used in leasing existing properties, but often in these cases only one or two leases are up for renewal at a time.
Appraising real estate is another specialized segment of the business. An appraiser writes a report called an appraisal that is used to determine the market value of a property. Banks and mortgage companies usually require an appraisal on a property being financed to verify that the property is adequate security for a loan. Individuals hire appraisers to verify a property's market value. Appraisers working for the local government to determine the assessed value of property for tax purposes are usually called assessors.
The property appraisal must take into account the selling prices of similar pieces of property and also include specific mention of any neighborhood characteristics that detract from or increase the property's value. The appraisal report includes the structural condition of a piece of property, which is also part of the market value.
Most real estate professionals spend part or much of their workday away from their desks. They rely on mobile devices such as laptops, tablets, and smartphones to stay in touch with clients and keep up with their workload. They use Google Calendar and similar programs for scheduling meetings and conference calls. Real estate professionals who work with smaller properties may use Microsoft Excel spreadsheets to keep track of clients, and those who work with larger, more complicated properties may use real estate valuation software such as ARGUS. They also use various customer relationship management platforms to create online and offline marketing campaigns, including e-mails, newsletters, and postcards.