Knowing how real estate works
Real estate defined in law is an “immovable object” with a legal description that defines its space and place in our geography. A Registered Land Surveyor is a person with specialized knowledge on measuring and documenting land parcels according to the law. As the United States has grown, most every parcel of the land is surveyed and spatially identified before being designated for eventual ownership under the law. The land records are open and available for all to see.
When property changes hands these open records must be updated to keep the ownership current and legal under the law. Title and abstract companies are private companies that search and issue guaranteed reports on these records for a fee. The rights of ownership also carry responsibilities. Easements, mineral rights, various zoning codes and variances that “run with the land” are common for almost every parcel. Your basic understanding of this system can be important to you when making certain lifestyle decisions. While a read of the title policy may take time and raise questions for you, issues are much easier to deal with before completing the transaction.
The multiple listing service (MLS)
When buying or selling real estate, the following history will put the process in perspective for you. The local real estate board is the trade organization for brokers and agents. A shared listing pool began in the 1950s. Before that time agents negotiated commission sharing on individual transactions or a company by company basis. The MLS model and its accompanying rules of order saved time for both agents and consumers. One of the principal advances was the printing of an MLS book that was distributed to member agents containing the inventory of all real estate agents in the local board of Realtor’s territory.
In 1975, the industry began a computerized Multiple Listing Services (MLS) as a method to provide current inventory for agents. The printed MLS books could not keep data current and were expensive to print. One of the primary benefits offered by an agent is access to MLS home listings data. Because consumers do not have direct access to this data, the agent has primary control over the process of searching and filtering the MLS data under this system. These computerized systems have evolved today into a valuable resource for understanding local markets quickly and effortlessly. Gathering the important information can reduce the time consumers spend learning the state of their local market. There are over eight hundred active MLS services in the United States.
The U.S. residential real estate market
The residential real estate industry is one of the largest industries in the United States. There are approximately one million real estate agents in the United States that represent approximately 10,000 real estate companies. There are a number of enterprises that tally residential home sales in the United States. A review of several of the leading reports point to over one trillion dollars in residential sales volume in 2013. Large numbers require explanation so here is the math. (5,090,000 homes sold) x ($197,000.00) = ($1,002,730,000,000). A trillion one dollar bills placed end-to-end, would be further than from the earth to our sun.
REAL Trends, a leading real estate magazine, reports the ten largest brokerage firms accounted for about 15% of all brokered residential real estate transaction volume in 2013, and the single largest firm accounted for less than 8% of total transaction volume. Some brokerage firms affiliate with national franchise brands, such as Keller Williams, Electronic Realty Associates (ERA), Coldwell Banker, Prudential and RE/MAX. The franchise brands are often part of larger companies who license their brand names and trademarks and provide other marketing support to franchisee brokerage firms. These brokerage firms, like all the independent brokerage firms, typically engage agents to work for them as independent contractors and, as a result, all brokerage firms have limited direct influence over the client relationship or the quality of client service.
Because consumers are not able to gain direct access to comprehensive and relevant information, and because consumers will often alter their requirements, there is a risk that agents will misinterpret or omit information consumers could see as important to their circumstances. Perhaps this circumstance is one of the reasons my limited research indicates that of all the regulated businesses in the United States, real estate is the second highest consumer complaint generator of many states regulating authorities. Healthcare is the only industry generating more complaints.
Despite the inherent risks, the vast majority of consumers continue to choose an agent over “going it alone,” as they believe that option is even riskier and more time consuming.
One of DearMonty.com primary goals is to heighten the awareness of both the consumer and the agent to these circumstances with the end goal being to reduce transaction errors. Learn more..