Tuesday, October 19, 2010
Definitions, Discussion and Explanations; Real Estate, Real Property and Leased Land
We Realtors and Attorneys use the term fee simple to describe land that is being sold as real property; that is real estate. We used the term leased land or leasehold interest to describe land that is not transferring as real estate.
This rather lengthy text is regarding Leased Land, Real Estate, Private Property, Chattels, Mobile Homes, Homes on Leased Land and a legal dissertation to define, describe and determine the differences.
Terminology is important when discussing Real Estate, i.e. real property.
Black’s Law Dictionary is the recognized, definitive source for legal definitions under our American Law; which is derived from English Law.
Delaware, and the rest of the original British Colonies, has some land that is leased rather than owned by the residents of that land. Much of it is not evident to the casual observer.
The land on Lewes Beach is leased, not owned by the home owners. The land of Lewes Beach is owned by the Town of Lewes. The lands of Rehoboth by the Sea and Dewey Beach include leased land too. Most of the leases on that land will NOT be renewed but will return to the owners and the homes on top of that land will be removed by the home owners at their expense. Much of the land in Riverdale, on Indian River Bay, adjacent to Oak Orchard is leased as well. In Riverdale the leased land is owned by Chief Clark of the Nanticoke Indians.
We have about half the inhabitants of Sussex County living on leased land; most of that leased land is found in what people call mobile home parks or communities. However, in those communities there are seldom any homes that are truly mobile and there are even two story stick built homes on some of the leased lands in those communities. Condominiums and town houses are sometimes found on leased land as well. Some folks find all this rather difficult to understand.
We Realtors and Attorneys use the term fee simple to describe land that is being sold as real property; that is real estate. We used the term leased land or leasehold interest to describe land that is not transferring as real estate.
This rather lengthy text is regarding Leased Land, Real Estate, Private Property, Chattels, Mobile Homes, Homes on Leased Land and a legal dissertation to define, describe and determine the differences. Click Here!
Terminology is important when discussing Real Estate, i.e. real property.
Black’s Law Dictionary is the recognized, definitive source for legal definitions under our American Law; which is derived from English Law
PROPERTY: In the strict legal sense, an aggregate of rights which are guaranteed and protected by government. BL6, p. 1216.
PERSONALTY: Personal property; movable property; chattels; property that is not attached to real estate. BL6, p. 1144
PROPERTY: (personal property) - In broad and general sense, everything that is the subject of ownership, not coming under the denomination of real estate. A right or interest less than a freehold in realty, or any right or interest which one has in things movable. BL6, p. 1217
Therefore personal property, is that which can be easily removed from the real estate, and is not real estate. Personal property includes crops, trees, shrubs, trailers, sheds, cars, mobile homes, manufactured homes that have a Department of Motor Vehicle title instead of a deed, and the contents of a home or building. In a home or business the personal property includes drapes, lighting fixtures, rugs (not installed carpeting) free-standing cabinets and cupboards, furniture, and all the contents of closets, drawers and buildings. Buildings without a foundation, that is sheds that are just supported by blocks are chattel property, that is personal property, and not part of the real estate. Such chattel includes dog houses and particularly the little storage buildings that are so common outside of homes today.
LANDS: In the most general sense, comprehends any ground, soil or earth whatsoever... Black's Law dictionary 6th Ed. (BL6), p.877
PRIVATE PROPERTY: As protected from being taken for public uses, is such property as belongs absolutely to an individual, and of which he has the exclusive right of disposition. Property of a specific, fixed and tangible nature, capable of being in possession and transmitted to another, such as houses, lands, and chattels. BL6, p. 1217. Private property is land, houses, and chattels. Private property is protected from being taken for public uses. Private property is owned absolutely.
REAL ESTATE synonymous with real property" and p.1218 REAL PROPERTY ... A general term for lands, tenements, hereditaments (those things which are hereditary); which on the death of the owner intestate, passes to his heir." BL6, p1263
ESTATE: The degree, quantity, nature and extent of interest which a person has in REAL and PERSONAL property. An ESTATE in lands, tenements, and hereditaments signifies such interest as the tenant has therein. BL6, p.547 The definitions here all refer to: real estate = real property = estate = lands, tenements, and hereditaments. At first, one might think that ‘real property' is the proper term for 'all lands'. But it doesn't state the manner of ownership as clearly as the definition of estate. We just had a huge instance of this when the thousands of leased land lots under the homes of several thousand people, in Angola, Pots Nets, and Long Neck areas owned by the Robert Tunnel family was inherited by the children.
IN OUR AREA THERE ARE NUMEROUS LEASED LAND PROPERTIES AND THOSE PROPERTIES ARE THE REAL ESTATE OF THE OWNER OF THE LAND – NOT THE OWNER OF THE HOME WHICH IS UPON THAT LAND. If you examine the definition for ESTATE it refers to an interest in the same articles defined in real property and real estate.
What is this LAND and WHO owns it and HOW is it owned? Land can be private property OR estate, i.e. real estate. Estate is an interest in “real property" by a person or a tenant. Private property is owned absolutely by an individual.
INTEREST: More particularly it means a right to have the advantage of accruing from anything; any right in the nature of property, but less than title. - BL6, p.812. By this definition it's clear that INTEREST cannot be TITLE, since it is less than title. Interest may be a property right to land, but it's not a right to absolute ownership of land. Those who live on leased land, thus, have only an interest in the land; and that interest is a lease-hold interest. Is there a definition of property that says it's land held in absolute ownership, as does private property's definition? We can delve into this more.
ABSOLUTE TITLE - As applied to title to land, an exclusive title, or at least a title which excludes all others not compatible with it. An absolute title to land cannot exist at the same time in different persons or in different governments. BL6, p.1485
PRIVATE PROPERTY - ... is such property as belongs absolutely to an individual, and of which he has the exclusive right of disposition. BL6, p.1217
OWN - To have a good legal title; to hold as property; to have a legal or rightful title to; to have; to possess. BL6, p. 1105. To "own" is to have title. An interest is LESS THAN TITLE.
ESTATE: The degree, quantity, nature and extent of interest which a person has in real and personal property. An estate in lands, tenements, and hereditaments signifies such interest as the tenant has therein. - - BL6, p.547 From these definitions, it's plain that we can't absolutely "own" real estate. We can only have a qualified ownership of qualified and described ownership of Real Estate. Thus, we need that Deed Description to describe it and qualify it. That ownership is also qualified by various government rights, decrees and laws, from antiquity, such as rights against trespass. That ownership is qualified by taxation, zoning, rights of way, and a myriad of other entailments. We need, therefore, a title search to determine those entailments, some of which are invisible.
Therefore there is NOT as much difference in the rights and privileges of ownership and interest as one is led to believe. I have no problem with those who live on leased land instead of owning the land. Usually they are paying far less than it would cost them to own the same property. However, they don’t often get any appreciation of the land; the landlord gets the appreciation in real value, while the resident can appreciate the lifestyle for less cost per month or year.
However, since an interest in leased land is not automatically transferable and is NOT Real Estate and since the chattel property upon it, the mobile home is personal property, without a deed but instead has a title – Realtors are not by law supposed to be involved in the sale of such – but we are. We are supposed to only be selling real property. It gets all cloudy and foggy doesn’t it. That is why there are people and companies who sell mobile homes on leased land who are not realtors and don’t need to be. In fact, although no one will discuss it, Realtors are not supposed to sell mobile homes on leased land. We don’t need to engage in that battle any more than I just did by describing it.
OWNERSHIP: The complete dominion, title, or proprietary, including right in a thing or claim... Ownership of property is either absolute or qualified. The ownership of property is absolute when a single person has dominion over it, and may use it or dispose of it according to his pleasure, subject only to general laws. The ownership is qualified when it is shared with one or more persons, when the time of enjoyment is deferred or limited, or when the use is restricted. - BL6, p. 1106 Such sharing is common with husband and wife, partners, families and corporations, etc.
DOMINION - Generally accepted definition of "dominion" is perfect control in right of ownership. The word implies both title and possession and appears to require a complete retention of control over disposition. - - -BL6, p. 486 I think you'd agree that zoning, building codes, home owners association covenants, condominium documents of use and business licensing is a restriction on the use of land (if it's Real Estate). And there is obviously the fact that failure to pay property taxes on real estate will result in loss of said property. That's definitely not absolute ownership. But private property is defined as ABSOLUTE OWNERSHIP, not qualified (interest).
PROPERTY (tangible) - All property that is touchable and has real existence (physical) whether it is real or personal. - - BL6, p. 1218 In summation, it takes a good attorney, and one well versed and experienced in real estate to understand the complex definitions, rights, liabilities, and privileges of real estate ownership. I have been buying and selling real estate for myself and assisting others in the buying and selling of real estate for thirty years. I have taught courses on real estate and real estate law. And, I would NOT consider purchasing a property, or purchasing property on leased land without the professional and paid assistance of an attorney who is a real estate specialist in the exact county in which the property is located. Other attorneys from other areas are not valid choices at all.
Monday, October 18, 2010
Real Estate Agents and the Internet
Internet and the Real Estate Agents - Learn how to Buy and Sell Real Estate in Today world.
Then and Now
How things changes, so fast! Ten years ago, a search for real estate would have started in the office of a local real estate agent or by just driving around town. At the agent's office, you would spend an afternoon flipping through pages of active property listings from the local Multiple Listing Service (MLS). After choosing properties of interest, you would spend many weeks touring each property until you found the right one. Finding market data to enable you to assess the asking price would take more time and a lot more driving, and you still might not be able to find all of the information you needed to get really comfortable with a fair market value.
Today, most property searches start on the Internet. A quick keyword search on Google by location will likely get you thousands of results. If you spot a property of interest on a real estate web site, you can typically view photos online and maybe even take a virtual tour. You can then check other Web sites, such as the local county assessor, to get an idea of the property's value, see what the current owner paid for the property, check the real estate taxes, get census data, school information, and even check out what shops are within walking distance-all without leaving your house!
While the resources on the Internet are convenient and helpful, using them properly can be a challenge because of the volume of information and the difficulty in verifying its accuracy. At the time of writing, a search of "Denver real estate" returned 2,670,000 Web sites. Even a neighborhood specific search for real estate can easily return thousands of Web sites. With so many resources online how does an investor effectively use them without getting bogged down or winding up with incomplete or bad information? Believe it or not, understanding how the business of real estate works offline makes it easier to understand online real estate information and strategies.
The Business of Real Estate
Real estate is typically bought and sold either through a licensed real estate agent or directly by the owner. The vast majority is bought and sold through real estate brokers. (We use "agent" and "broker" to refer to the same professional.) This is due to their real estate knowledge and experience and, at least historically, their exclusive access to a database of active properties for sale. Access to this database of property listings provided the most efficient way to search for properties.http://realestateinfoaxis.com/!
The MLS (and CIE)
The database of residential, land, and smaller income producing properties (including some commercial properties) is commonly referred to as a multiple listing service (MLS). In most cases, only properties listed by member real estate agents can be added to an MLS. The primary purpose of an MLS is to enable the member real estate agents to make offers of compensation to other member agents if they find a buyer for a property.
This purposes did not include enabling the direct publishing of the MLS information to the public; times change. Today, most MLS information is directly accessible to the public over the Internet in many different forms.
Commercial property listings are also displayed online but aggregated commercial property information is more elusive. Larger MLSs often operate a commercial information exchange (CIE). A CIE is similar to an MLS but the agents adding the listings to the database are not required to offer any specific type of compensation to the other members. Compensation is negotiated outside the CIE.
In most cases, for-sale-by-owner properties cannot be directly added to an MLS and CIE, which are typically maintained by REALTOR associations. The lack of a managed centralized database can make these properties more difficult to locate. Traditionally, these properties are found by driving around or looking for ads in the local newspaper's real estate listings. A more efficient way to locate for-sale-by-owner properties is to search for a for-sale-by-owner Web site in the geographic area.
What is a REALTOR? Sometimes the terms real estate agent and REALTOR are used interchangeably; however, they are not the same. A REALTOR is a licensed real estate agent who is also a member of the NATIONAL ASSOCIATION OF REALTORS. REALTORS are required to comply with a strict code of ethics and conduct.
MLS and CIE property listing information was historically only available in hard copy, and as we mentioned, only directly available to real estate agents members of an MLS or CIE. About ten years ago, this valuable property information started to trickle out to the Internet. This trickle is now a flood!
One reason is that most of the 1 million or so REALTORS have Web sites, and most of those Web sites have varying amounts of the local MLS or CIE property information displayed on them. Another reason is that there are many non-real estate agent Web sites that also offer real estate information, including, for-sale-by-owner sites, foreclosure sites, regional and international listing sites, County assessor sites, and valuation and market information sites. The flood of real estate information to the Internet definitely makes the information more accessible but also more confusing and subject to misunderstanding and misuse.
Real Estate Agents
Despite the flood of real estate information on the Internet, most properties are still sold directly through real estate agents listing properties in the local MLS or CIE. However, those property listings do not stay local anymore. By its nature, the Internet is a global marketplace and local MLS and CIE listings are normally disseminated for display on many different Web sites. For example, many go to the NATIONAL ASSOCIATION OF REALTORS Web site, http://www.realtor.com, and to the local real estate agent's Web site. In addition, the listing may be displayed on the Web site of a local newspaper. In essence, the Internet is just another form of marketing offered by today's real estate agent, but it has a much broader reach than the old print advertising.
In addition to Internet marketing, listing agents may also help the seller establish a price, hold open houses, keep the seller informed of interested buyers and offers, negotiate the contract and help with closing. When an agent provides all of these services it is referred to as being a full service listing arrangement. While full service listing arrangements are the most common type of listing arrangement, they are not the only option anymore.
Changes in the technology behind the real estate business have caused many agents to change the way they do business. In large part, this is due to the instant access most consumers now have to property listings and other real estate information. In addition, the Internet and other technologies have automated much of the marketing and initial searching process for real estate. For example, consumers can view properties online and make inquires via email. Brokers can use automated programs to send listings to consumers that match their property criteria. So, some agents now limit the services they offer and change their fees accordingly. An agent may offer to advertise the property in the MLS but only provide limited additional services. In the future, some real estate agents may offer services in more of an ala carte fashion.
Because of the volume of real estate information on the Internet, when people hire a real estate agent today they should look at the particular services offered by the agent and the depth of their experience and knowledge in the relevant property sector. It is no longer just about access to property listing information. Buyers and sellers historically found agents by referrals from friends and family. The Internet now provides ways to directly find qualified agents or to research the biography of an agent referred to you offline. One such site, AgentWorld.com, is quickly becoming the LinkedIn or Facebook for real estate agents. On this site an agent can personalize their profile, start a blog, post photos and videos and even create a link to their web site for free. Once unique content is added to their profile page the search engines notice!
Some have argued that the Internet makes REALTORS and the MLS less relevant. We believe this will be false in the long run. It may change the role of the agent but will make knowledgeable, qualified, and professional REALTORS more relevant than ever. In fact, the number of real estate agents has risen significantly in recent years. No wonder, the Internet has made local real estate a global business. Besides, Internet or not, the simple fact remains that the purchase of real property is the largest single purchase most people make in their life (or, for many investors, the largest multiple purchases over a lifetime) and they want expert help. As for the MLS, it remains the most reliable source of real estate listing and sold information available and continues to enable efficient marketing of properties. So, what is the function of all the online real estate information?
Online real estate information is a great research tool for buyers and sellers and a marketing tool for sellers. When used properly, buyers can save time by quickly researching properties and, ultimately, make better investment decisions. Sellers can efficiently research the market and make informed decisions about hiring an agent and marketing their properties online. The next step is to know where to look online for some of the best resources.
Internet Strategies
In the sections that follow, we provide strategies and tips on how to use the Internet to locate properties for sale and research information relevant to your decision to purchase the property. There are many real estate Web sites from which to choose and although we do not mean to endorse any particular Web site, we have found the ones listed here to be good resources in most cases or to be so popular that they need mention. One way to test a Web site's accuracy is to search for information about a property you already own.
Finding Real Estate for Sale
Despite the widely available access to real estate listings, many believe that MLS databases continue to offer the most complete and accurate source of real estate information. Most MLSs now distribute content to other Web sites (primarily operated by real estate agents). An excellent starting point for MLS originated content is the national NAR Web site, realtor.com, which is also the most popular web site for searching real estate listings. Virtually all local and regional MLSs have an agreement with realtor.com to display much of their active listing inventory.
Some local and regional MLS systems also have a publicly accessible Web site. However, to get complete information you will most likely still need to find a qualified local REALTOR. Many local real estate agents will also provide their customers (via email) new listings that are input into the MLS that match their predefined criteria. This can be very helpful to a busy buyer.
There are also many Web sites that display both real estate agent listed and for-sale-by-owner properties. Some of the more popular Web sites include zillow.com and trulia.com. These sites offer other services too. For example, zillow.com is best known for its instantaneous property valuation function and trulia.com for providing historical information. Another source of properties for sale is the state, regional, and local Web sites associated with brokerage companies; for example, remax.com or prudential.com. Search engines like yahoo.com and classified advertising sites like craigslist.com also have a large number of active real estate listings.
One key difference between these sites is how much information you can access anonymously. For example, at trulia.com you can shop anonymously up to a point but then you will need to click through to the agent's Web site for more information. Many new real estate search engines allow you to sift through listings without having to fill out a form. The best strategy is to browse a few of the sites listed above to find geographic areas or price ranges that are interesting. Once you get serious about a property, then that is the time to find a qualified REALTOR of your choice to conduct a complete search in the local MLS.
It also never hurts to search the old-fashioned way by driving through the neighborhoods that interest you. There is no substitute for physically, not virtually, walking the block when you are making a serious investment decision. In this sense, real estate is still a very local business and standing in front of the property can lead to a much different decision than viewing a Web page printout.
Valuing Real Estate
As we mentioned, one of the most popular real estate tools is zillow.com's instant property valuation. Just type in an address and in and you get a property value. It even charts the price ups and downs, and shows the last date sold (including price) and the property taxes. There are other sites that provide similar tools such as housevalues.com and homegain.com. Unfortunately, many people use these estimated values alone to justify sales prices, offers and counteroffers. However, these are only rough estimates based on a formula that incorporates the local county sales information. These estimates can swing wildly over a short period of time and do not appear to always track actual market changes, which are normally more gradual. In addition, these estimates do not automatically take into account property remodels or renovations or other property specific or local changes. This is not to say these sites are not useful. In fact, they are great starting points and can provide a good ball-park value in many cases.
When it comes to getting a more accurate value for a particular property, there are other strategies that are more trustworthy. One is to go directly to your county's Web site. More often than not the county assessor's area of the Web site provides sales and tax information for all properties in the county. If you want to research a particular property or compare sales prices of comparable properties, the local assessor's sites are really helpful. When you visit a county's Web site you are getting information straight from the source. Most counties today publish property information on their Web sites. Many times you cannot only see the price a previous owner paid, but the assessed value, property taxes, and maps. Some county assessors are now adding a market and property valuation tools too.
Given the importance of valuation to investing, we are also going to remind you of the two most important (non-Internet) valuation methods: real estate agents and appraisers. Working with a local REALTOR is an accurate and efficient way to get value information for a property. While one of the primary purposes of the MLS is to market the active property listings of its members, the system also collects sales information for those listings. REALTOR members can pull this sales information and produce comparable market analyses (sometimes called CMAs) that provide an excellent snapshot of a particular property's value for the market in a particular area.
Finally, the most accurate way to value a property is by having a certified appraiser produce an appraisal. An appraiser will typically review both the sold information in the MLS system as well as county information and then analyze the information to produce a valuation for the property based on one or more approved methods of valuation. These methods of valuation can include a comparison of similar properties adjusted for differences between the properties, determine the cost to replace the property, or, with an income producing property, determine a value based on the income generated from the property.
The Neighborhood
There are many ways the Internet can help you get the scoop on a particular neighborhood. For example, census data can be found at census.gov. You can also check out the neighborhood scoop at sites like outside.in or review local blogs. A blog is a Web site where people discuss topics by posting and responding to messages. Start by looking at placeblogger.com and kcnn.org/citymediasites.com for a directory of blogs. Trulia.com has a "Heat Map" that shows how hot or cold each neighborhood is based on prices, sales, or popularity among the sites users.
Schools
When it comes to selling residential property or rental properties that cater to families, the quality of the area school district makes a huge difference. There are many Web sites devoted to school information. Check out greatschools.net or schoolmatters.com. Most local school districts also have their own Web site. These sites contain a variety of information about the public schools and the school district, including its district demographics, test scores, and parent reviews.
Finding the Right Real Estate Agent
A recent addition to the Internet boom in real estate information is Web sites that let real estate agents market their expertise and local knowledge by displaying their professional profiles and socially networking with blogs. You can search to find an agent with a particular expertise, geographic area of specialization, or an agent offering specific services. The web site AgentWorld.com lets users quickly and easily find an agent with the right expertise using keyword searches and clean and simple agent profiles. AgentWorld.com also enables agents to post personalized blogs, photos and videos to help consumers find the best agent for their needs. Plus, many agent profiles include a direct link to the agent's web site where you will likely find the local MLS listings.
Maps and Other Tools
The Internet has made mapping and locating properties much easier. To get an aerial view or satellite image of a property or neighborhood, go to maps.live.com or maps.google.com or visit walkscore.com to see how walk-able a particular property is. These sites can give you an idea of the neighborhood characteristics and the types of entertainment, restaurants, and other facilities that are within walking distance of the property. Maps.Live.com provides a view at an angle so you can see the sides of houses and Maps.Google even gives you a 360 degree street-level view for certain neighborhoods. If you have not tried one of these satellite map Web sites, you really should if only for amusement.
Final Thoughts on Internet Strategies
The Internet is a very effective research and marketing tool for real estate investors but is not a replacement for a knowledgeable experienced real estate professional. The Internet can save you time and money by enabling quick and easy property research and marketing options. Sites like AgentWorld.com also help you efficiently find a REALTOR who fits your buying or selling needs.
Always remember, when it comes to Internet strategies for real estate: More knowledge is better. You need to use the Internet to build your knowledge base on a target property or to find a real estate agent with expertise you need. However, the big caution here is that the Internet should not replace human judgment and perspective, expert advice or physical due diligence-keys to successful investing.
About the Author:
Tyler D. Kraemer is an attorney and nationally published author. His books include The Real Estate Investor's Tax Strategy Guide (2009 Adams Media) and The Complete Guide to Reverse Mortgages (2007 Adams Media). Tyler has been interviewed by publications across the U.S. on real estate, business and Internet related topics. He is also a contributing editor to the web site http://www.agentworld.com
Click Here!
Then and Now
How things changes, so fast! Ten years ago, a search for real estate would have started in the office of a local real estate agent or by just driving around town. At the agent's office, you would spend an afternoon flipping through pages of active property listings from the local Multiple Listing Service (MLS). After choosing properties of interest, you would spend many weeks touring each property until you found the right one. Finding market data to enable you to assess the asking price would take more time and a lot more driving, and you still might not be able to find all of the information you needed to get really comfortable with a fair market value.
Today, most property searches start on the Internet. A quick keyword search on Google by location will likely get you thousands of results. If you spot a property of interest on a real estate web site, you can typically view photos online and maybe even take a virtual tour. You can then check other Web sites, such as the local county assessor, to get an idea of the property's value, see what the current owner paid for the property, check the real estate taxes, get census data, school information, and even check out what shops are within walking distance-all without leaving your house!
While the resources on the Internet are convenient and helpful, using them properly can be a challenge because of the volume of information and the difficulty in verifying its accuracy. At the time of writing, a search of "Denver real estate" returned 2,670,000 Web sites. Even a neighborhood specific search for real estate can easily return thousands of Web sites. With so many resources online how does an investor effectively use them without getting bogged down or winding up with incomplete or bad information? Believe it or not, understanding how the business of real estate works offline makes it easier to understand online real estate information and strategies.
The Business of Real Estate
Real estate is typically bought and sold either through a licensed real estate agent or directly by the owner. The vast majority is bought and sold through real estate brokers. (We use "agent" and "broker" to refer to the same professional.) This is due to their real estate knowledge and experience and, at least historically, their exclusive access to a database of active properties for sale. Access to this database of property listings provided the most efficient way to search for properties.http://realestateinfoaxis.com/!
The MLS (and CIE)
The database of residential, land, and smaller income producing properties (including some commercial properties) is commonly referred to as a multiple listing service (MLS). In most cases, only properties listed by member real estate agents can be added to an MLS. The primary purpose of an MLS is to enable the member real estate agents to make offers of compensation to other member agents if they find a buyer for a property.
This purposes did not include enabling the direct publishing of the MLS information to the public; times change. Today, most MLS information is directly accessible to the public over the Internet in many different forms.
Commercial property listings are also displayed online but aggregated commercial property information is more elusive. Larger MLSs often operate a commercial information exchange (CIE). A CIE is similar to an MLS but the agents adding the listings to the database are not required to offer any specific type of compensation to the other members. Compensation is negotiated outside the CIE.
In most cases, for-sale-by-owner properties cannot be directly added to an MLS and CIE, which are typically maintained by REALTOR associations. The lack of a managed centralized database can make these properties more difficult to locate. Traditionally, these properties are found by driving around or looking for ads in the local newspaper's real estate listings. A more efficient way to locate for-sale-by-owner properties is to search for a for-sale-by-owner Web site in the geographic area.
What is a REALTOR? Sometimes the terms real estate agent and REALTOR are used interchangeably; however, they are not the same. A REALTOR is a licensed real estate agent who is also a member of the NATIONAL ASSOCIATION OF REALTORS. REALTORS are required to comply with a strict code of ethics and conduct.
MLS and CIE property listing information was historically only available in hard copy, and as we mentioned, only directly available to real estate agents members of an MLS or CIE. About ten years ago, this valuable property information started to trickle out to the Internet. This trickle is now a flood!
One reason is that most of the 1 million or so REALTORS have Web sites, and most of those Web sites have varying amounts of the local MLS or CIE property information displayed on them. Another reason is that there are many non-real estate agent Web sites that also offer real estate information, including, for-sale-by-owner sites, foreclosure sites, regional and international listing sites, County assessor sites, and valuation and market information sites. The flood of real estate information to the Internet definitely makes the information more accessible but also more confusing and subject to misunderstanding and misuse.
Real Estate Agents
Despite the flood of real estate information on the Internet, most properties are still sold directly through real estate agents listing properties in the local MLS or CIE. However, those property listings do not stay local anymore. By its nature, the Internet is a global marketplace and local MLS and CIE listings are normally disseminated for display on many different Web sites. For example, many go to the NATIONAL ASSOCIATION OF REALTORS Web site, http://www.realtor.com, and to the local real estate agent's Web site. In addition, the listing may be displayed on the Web site of a local newspaper. In essence, the Internet is just another form of marketing offered by today's real estate agent, but it has a much broader reach than the old print advertising.
In addition to Internet marketing, listing agents may also help the seller establish a price, hold open houses, keep the seller informed of interested buyers and offers, negotiate the contract and help with closing. When an agent provides all of these services it is referred to as being a full service listing arrangement. While full service listing arrangements are the most common type of listing arrangement, they are not the only option anymore.
Changes in the technology behind the real estate business have caused many agents to change the way they do business. In large part, this is due to the instant access most consumers now have to property listings and other real estate information. In addition, the Internet and other technologies have automated much of the marketing and initial searching process for real estate. For example, consumers can view properties online and make inquires via email. Brokers can use automated programs to send listings to consumers that match their property criteria. So, some agents now limit the services they offer and change their fees accordingly. An agent may offer to advertise the property in the MLS but only provide limited additional services. In the future, some real estate agents may offer services in more of an ala carte fashion.
Because of the volume of real estate information on the Internet, when people hire a real estate agent today they should look at the particular services offered by the agent and the depth of their experience and knowledge in the relevant property sector. It is no longer just about access to property listing information. Buyers and sellers historically found agents by referrals from friends and family. The Internet now provides ways to directly find qualified agents or to research the biography of an agent referred to you offline. One such site, AgentWorld.com, is quickly becoming the LinkedIn or Facebook for real estate agents. On this site an agent can personalize their profile, start a blog, post photos and videos and even create a link to their web site for free. Once unique content is added to their profile page the search engines notice!
Some have argued that the Internet makes REALTORS and the MLS less relevant. We believe this will be false in the long run. It may change the role of the agent but will make knowledgeable, qualified, and professional REALTORS more relevant than ever. In fact, the number of real estate agents has risen significantly in recent years. No wonder, the Internet has made local real estate a global business. Besides, Internet or not, the simple fact remains that the purchase of real property is the largest single purchase most people make in their life (or, for many investors, the largest multiple purchases over a lifetime) and they want expert help. As for the MLS, it remains the most reliable source of real estate listing and sold information available and continues to enable efficient marketing of properties. So, what is the function of all the online real estate information?
Online real estate information is a great research tool for buyers and sellers and a marketing tool for sellers. When used properly, buyers can save time by quickly researching properties and, ultimately, make better investment decisions. Sellers can efficiently research the market and make informed decisions about hiring an agent and marketing their properties online. The next step is to know where to look online for some of the best resources.
Internet Strategies
In the sections that follow, we provide strategies and tips on how to use the Internet to locate properties for sale and research information relevant to your decision to purchase the property. There are many real estate Web sites from which to choose and although we do not mean to endorse any particular Web site, we have found the ones listed here to be good resources in most cases or to be so popular that they need mention. One way to test a Web site's accuracy is to search for information about a property you already own.
Finding Real Estate for Sale
Despite the widely available access to real estate listings, many believe that MLS databases continue to offer the most complete and accurate source of real estate information. Most MLSs now distribute content to other Web sites (primarily operated by real estate agents). An excellent starting point for MLS originated content is the national NAR Web site, realtor.com, which is also the most popular web site for searching real estate listings. Virtually all local and regional MLSs have an agreement with realtor.com to display much of their active listing inventory.
Some local and regional MLS systems also have a publicly accessible Web site. However, to get complete information you will most likely still need to find a qualified local REALTOR. Many local real estate agents will also provide their customers (via email) new listings that are input into the MLS that match their predefined criteria. This can be very helpful to a busy buyer.
There are also many Web sites that display both real estate agent listed and for-sale-by-owner properties. Some of the more popular Web sites include zillow.com and trulia.com. These sites offer other services too. For example, zillow.com is best known for its instantaneous property valuation function and trulia.com for providing historical information. Another source of properties for sale is the state, regional, and local Web sites associated with brokerage companies; for example, remax.com or prudential.com. Search engines like yahoo.com and classified advertising sites like craigslist.com also have a large number of active real estate listings.
One key difference between these sites is how much information you can access anonymously. For example, at trulia.com you can shop anonymously up to a point but then you will need to click through to the agent's Web site for more information. Many new real estate search engines allow you to sift through listings without having to fill out a form. The best strategy is to browse a few of the sites listed above to find geographic areas or price ranges that are interesting. Once you get serious about a property, then that is the time to find a qualified REALTOR of your choice to conduct a complete search in the local MLS.
It also never hurts to search the old-fashioned way by driving through the neighborhoods that interest you. There is no substitute for physically, not virtually, walking the block when you are making a serious investment decision. In this sense, real estate is still a very local business and standing in front of the property can lead to a much different decision than viewing a Web page printout.
Valuing Real Estate
As we mentioned, one of the most popular real estate tools is zillow.com's instant property valuation. Just type in an address and in and you get a property value. It even charts the price ups and downs, and shows the last date sold (including price) and the property taxes. There are other sites that provide similar tools such as housevalues.com and homegain.com. Unfortunately, many people use these estimated values alone to justify sales prices, offers and counteroffers. However, these are only rough estimates based on a formula that incorporates the local county sales information. These estimates can swing wildly over a short period of time and do not appear to always track actual market changes, which are normally more gradual. In addition, these estimates do not automatically take into account property remodels or renovations or other property specific or local changes. This is not to say these sites are not useful. In fact, they are great starting points and can provide a good ball-park value in many cases.
When it comes to getting a more accurate value for a particular property, there are other strategies that are more trustworthy. One is to go directly to your county's Web site. More often than not the county assessor's area of the Web site provides sales and tax information for all properties in the county. If you want to research a particular property or compare sales prices of comparable properties, the local assessor's sites are really helpful. When you visit a county's Web site you are getting information straight from the source. Most counties today publish property information on their Web sites. Many times you cannot only see the price a previous owner paid, but the assessed value, property taxes, and maps. Some county assessors are now adding a market and property valuation tools too.
Given the importance of valuation to investing, we are also going to remind you of the two most important (non-Internet) valuation methods: real estate agents and appraisers. Working with a local REALTOR is an accurate and efficient way to get value information for a property. While one of the primary purposes of the MLS is to market the active property listings of its members, the system also collects sales information for those listings. REALTOR members can pull this sales information and produce comparable market analyses (sometimes called CMAs) that provide an excellent snapshot of a particular property's value for the market in a particular area.
Finally, the most accurate way to value a property is by having a certified appraiser produce an appraisal. An appraiser will typically review both the sold information in the MLS system as well as county information and then analyze the information to produce a valuation for the property based on one or more approved methods of valuation. These methods of valuation can include a comparison of similar properties adjusted for differences between the properties, determine the cost to replace the property, or, with an income producing property, determine a value based on the income generated from the property.
The Neighborhood
There are many ways the Internet can help you get the scoop on a particular neighborhood. For example, census data can be found at census.gov. You can also check out the neighborhood scoop at sites like outside.in or review local blogs. A blog is a Web site where people discuss topics by posting and responding to messages. Start by looking at placeblogger.com and kcnn.org/citymediasites.com for a directory of blogs. Trulia.com has a "Heat Map" that shows how hot or cold each neighborhood is based on prices, sales, or popularity among the sites users.
Schools
When it comes to selling residential property or rental properties that cater to families, the quality of the area school district makes a huge difference. There are many Web sites devoted to school information. Check out greatschools.net or schoolmatters.com. Most local school districts also have their own Web site. These sites contain a variety of information about the public schools and the school district, including its district demographics, test scores, and parent reviews.
Finding the Right Real Estate Agent
A recent addition to the Internet boom in real estate information is Web sites that let real estate agents market their expertise and local knowledge by displaying their professional profiles and socially networking with blogs. You can search to find an agent with a particular expertise, geographic area of specialization, or an agent offering specific services. The web site AgentWorld.com lets users quickly and easily find an agent with the right expertise using keyword searches and clean and simple agent profiles. AgentWorld.com also enables agents to post personalized blogs, photos and videos to help consumers find the best agent for their needs. Plus, many agent profiles include a direct link to the agent's web site where you will likely find the local MLS listings.
Maps and Other Tools
The Internet has made mapping and locating properties much easier. To get an aerial view or satellite image of a property or neighborhood, go to maps.live.com or maps.google.com or visit walkscore.com to see how walk-able a particular property is. These sites can give you an idea of the neighborhood characteristics and the types of entertainment, restaurants, and other facilities that are within walking distance of the property. Maps.Live.com provides a view at an angle so you can see the sides of houses and Maps.Google even gives you a 360 degree street-level view for certain neighborhoods. If you have not tried one of these satellite map Web sites, you really should if only for amusement.
Final Thoughts on Internet Strategies
The Internet is a very effective research and marketing tool for real estate investors but is not a replacement for a knowledgeable experienced real estate professional. The Internet can save you time and money by enabling quick and easy property research and marketing options. Sites like AgentWorld.com also help you efficiently find a REALTOR who fits your buying or selling needs.
Always remember, when it comes to Internet strategies for real estate: More knowledge is better. You need to use the Internet to build your knowledge base on a target property or to find a real estate agent with expertise you need. However, the big caution here is that the Internet should not replace human judgment and perspective, expert advice or physical due diligence-keys to successful investing.
About the Author:
Tyler D. Kraemer is an attorney and nationally published author. His books include The Real Estate Investor's Tax Strategy Guide (2009 Adams Media) and The Complete Guide to Reverse Mortgages (2007 Adams Media). Tyler has been interviewed by publications across the U.S. on real estate, business and Internet related topics. He is also a contributing editor to the web site http://www.agentworld.com
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Sunday, October 17, 2010
Smart Tips for Real Estate Investing
If you compare the earning potential in the real estate business to other types of investments, the value of real estate properties don’t decrease in terms of value. If you want to secure your future and perhaps build your very own retirement portfolio, you should consider real estate investing.
Here are smart tips on how you can become a small real estate investor:
1. Try to find a mortgage broker.
2. Don’t just get rid of your investment properties without considering the consequences of such decision.
3. Before you make any purchase, you should first research about its potential earning properties.
4. Do you have your own home? If you want to become a successful real estate investor, you should have your own home.
5. Distribute fliers if you plan to purchase properties.
7. Find your own personal attorney. Get an attorney who is experienced in the real estate business.
For more information visit http://www.realestateinvestingcamp.com
Friday, January 8, 2010
Smart Tips for Real Estate Investing
If you compare the earning potential in the real estate business to other types of investments, the value of real estate properties don’t decrease in terms of value. If you want to secure your future and perhaps build your very own retirement portfolio, you should consider real estate investing
Here are smart tips on how you can become a small real estate investor:
1. Try to find a mortgage broker.
2. Don’t just get rid of your investment properties without considering the consequences of such decision.
3. Before you make any purchase, you should first research about its potential earning properties.
4. Do you have your own home? If you want to become a successful real estate investor, you should have your own home.
5. Distribute fliers if you plan to purchase properties.
7. Find your own personal attorney. Get an attorney who is experienced in the real estate business.
For more information visit http://www.realestateinvestingcamp.com
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