Lesson 1: An Introduction to Real Estate
Real Estate Principles of Georgia
Lesson 1: An Introduction to
Real Estate
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The Real Estate Industry
The real estate industry is divided into: y Residential real estate y Commercial real estate
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Real Estate Transactions
Real estate transaction may be: y Sale y Lease y Exchange
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Real Estate Transactions
Most basic real estate transaction is sale of a home, involving:
y Listing property y Showing property y Submitting and considering offers y Negotiations between seller and buyer
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Real Estate Transactions, cont.
y Execution of the contract y Property inspections y Financing arrangements y Property appraisal y Closing preparations y Buyer's walk-through y Closing
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Real Estate Transactions
Listing
Sellers put home on market by listing it. y Seller agrees to pay agent commission in exchange for agent finding a buyer. y Agent (listing agent) submits property information to MLS.
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Real Estate Transactions
Showing the property
Prospective buyers tour home with: y their own agents, y listing agent, or y another agent from MLS.
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Real Estate Transactions
Offers
Buyer submits written offer to purchase, including: y Price buyer is willing to pay y Closing date y Other terms of sale
In active market, desirable property often receives multiple competing offers.
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Real Estate Transactions
Offers
Offer is usually accompanied by (earnest money) deposit to show offer is serious and in good faith. y If offer is rejected, deposit returned to buyer. y If offer is accepted but sale later falls through, deposit may be returned to buyer.
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Real Estate Transactions
Negotiations
Seller may want to negotiate changes in the terms in buyer's offer. y Seller uses counteroffer to present these changes.
Buyer may respond with another counteroffer ? negotiations then go back and forth.
Offer Buyer
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Counter -
offer
4 Seller
Real Estate Transactions
Contract
When offer (or counteroffer) is accepted, a legally binding contract is formed.
Typically, contract is contingent on the fulfillment of certain specified conditions.
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Real Estate Transactions
Inspections
Buyer may order home inspection to have home's construction and condition evaluated.
Other inspections may also be ordered: pest inspection, soil stability test, etc.
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Real Estate Transactions
Financing
Unless buyer can pay for property in cash, financing must be arranged.
y Usually buyer comes up with cash downpayment and borrows remainder from mortgage lender.
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Real Estate Transactions
Appraisal
Since property will serve as collateral for loan, lender will require an appraisal.
Appraiser evaluates property and provides estimate of its market value to lender.
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Real Estate Transactions
Closing preparations
Many tasks must be completed before sale closes: y Arrange for seller's mortgage to be paid off y Order title insurance policy y Have deed and other documents recorded
May be handled by parties or by closing
agent.
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