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GETTING STARTED INREAL ESTATECHAPTER 1
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THE REAL ESTATE BUSINESS Run your real estate
business like a business.
Set specific hours for work and work those hours.
Be self motivated.
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1. Be selfmotivated (Master Marketing). 2. Master
the telephone. 3. Master listings. 4. Master
selling. 5. Learn your business.
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THE REAL ESTATE MARKETPLACE The real estate
marketplace, where you will be an agent, will
help buyers or sellers to buy or sell property.
It is the price a buyer will pay and not the
price a seller desires that ultimately determines
value. Prices are set by demand, this is when the
buyer wants property. Thus, buyers set the market
prices.
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Example In 1989 California lost the aerospace
industry and the real estate economy went down in
the cellar. Buyers and home owners lost their
jobs and home owners wanted to sell but nobody
wanted to buy.
At the present time house prices are inflating.
But we will have another decline in value. We
dont know when, but it will happen and a few
years later the appreciation cycle will begin
again. This cycle keeps repeating.
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Selling a home is a people business, NOT a
property business.
Who buys a HOME, the husband or the wife?
Usually the wife.
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Selling investment property is still a people
business, but you are more involved with the
benefits that the property can provide.
Who buys the investment property, the husband or
the wife?
This could be either the husband or the wife.
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Needs verses Wants. When you are working with
prospective clients you need to determine if they
have to buy, want to buy or if they are just
looking.
Try to work with the clients that need to buy.
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Emotion plays a significant part in a purchase
decision.
willsell vs. mustsell willbuy vs. mustbuy
Must sellers and buyers are the best motivated.
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COMFORT ZONE A task that a client would do that
would not cause excess anxiety.
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Example Your friend is driving you home at 300
in the morning.
How do you feel if he is driving on the freeway
at 25 MPH?
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How do you feel if he is driving on the freeway
at 55 MPH at 300 AM?
How do you feel if he is driving on the freeway
at 175 MPH at 300 AM?
Which one of the speeds would fit your comfort
zone, and which one would be scary?
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When a client is in a real estate transaction he
or she will face certain comfort zones.
Here are some comfort zones you should watch for
Cost of the home. The cost of the home will
determine the monthly payments and down payment.
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Financing. This is more important than cost. Can
the buyer afford the monthly payments?
Example If the home cost 1,000,000, most people
think that they could not afford the home. But if
the interest rate is 3 amortized over 100 years,
then the monthly payment would be 2,632 for
principal and interest. Many buyers could make
these payments, also no money down.
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Down payment. The buyer will usually put 20
down.
The are many programs today with less than 20,
but when using these programs the buyer will have
to pay mortgage insurance. There are some
assisted loan programs with 3 down or no down,
and some will have the closing costs included in
the down payment.
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BODY LANGUAGE Historically the authorities claim
that we have been speaking fluently for about
10,000 years. They also say that body language
has been around for about 10,000,000 years.
Body language is really quite simple. Basically
when we feel we are right, we are more aggressive
and we move forward. When we feel something is
wrong we move away from it.
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There are two people in every conversation or
sales, and each one will show their body
language. The presenter (the real estate
agent) The listener (the buyer or seller).
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While you may be inclined to believe the verbal
text you choose to convey to your client the
most important aspect of your presentation
message through body language. It's important to
realize that you need to use a second, more
subtle, and arguably more influential language
known as body language.
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Knowing how your posture and gestures support or
contradict your words is surprisingly vital, and
the same holds true for the client. Put to proper
use, nonverbal communication greatly enhances the
effectiveness of your presentation. Watch your
clients nonverbal communication and it will talk
to you.
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People communicate nonverbally by using
postures, gestures, facial expressions,
mannerisms, and physical appearance (body
language). In studies of nonverbal
communication, many experts agree that the impact
of your communication can be broken down as
follows Our body language 55 percent. How we
say the words 38 percent What we say (actual
words used) 7 percent
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As you can see, the words we use to deliver our
presentation aren't nearly as important as we'd
like to believe, since 93 percent of our message
is delivered nonverbally.
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Common Gestures And Their Meanings In Western
Society POSITIVE BODY LANGUAGE
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(No Transcript)
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NEGATIVE BODY LANGUAGE
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REAL ESTATE LICENSES Salesperson 4 year
license 18 month license You must take a
three-unit course in real estate principles to
take the real estate sales test this will give
you an 18 month license.
Complete Real Estate Practice (three units) and
one other qualifying three unit course to extend
your license to four years.
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Be at least 18 years of age and a U.S.
citizen. Pay necessary fees. Pass the
qualifying three hour 15 minute exam, with 70 or
better (150 questions).
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BROKER Be at least 18 years of age and a U.S.
citizen. Complete eight broker courses. Previous
real estate experience. Two years out of the last
five years, or have a four-year college
degree. Pay necessary fees. Pass the qualifying
two (2) - 2½ hour exams, with a score of 75 or
better (200 questions).
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BROKER COURSES
MUST HAVE Real Estate Practice Legal Aspects of
Real Estate Real Estate Finance Real Estate
Appraisal Real Estate Economics or Accounting.
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OTHER BROKER COURSES Any three of the
following Advance Real Estate Appraisal Advance
Real Estate Finance Business Law Real Estate
Economics. Real Estate Office administration. Real
Estate Property Management.
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CONTINUING EDUCATION FIRST RENEWAL Usually
applies to first-time sales people renewing their
license.
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You must have 12 hours Fair Housing Agency Trust
Funds Ethics
F A T E
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CONTINUING EDUCATION AFTER THE FIRST RENEWAL You
must take the FATE courses and others to
complete 45 hours.
An Agent renewing his or her license for the
second or more times may take a sixhour Survey
Course of agency, ethics, fair housing and trust
funds. The total must equal 45 hours of CE.
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EMPLOYEE or INDEPENDENT ONTRACTOR According to
California Real Estate law, an agent is an
employee of the broker.
According to IRS (Internal Revenue Service) or
FTB (Franchise Tax Board), an agent is an
independent contractor.
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EMPLOYEES According to the Business and
Professional Code (Section 10177(h)) a real
estate agent is an employee of the broker.
The broker is responsible for the actions of the
agent.
It is highly suggested that the broker carry
workers compensation on each employee. Today
many brokers will carry workers compensation
insurance for their independent contractors.
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INDEPENDENT CONTRACTOR IRS and FTB will treat a
salesperson as an independent contractor, if
three criteria are met
1. The salesperson is a real estate agent.
2. Reimbursement to the salesperson is based
solely on sales, not on hours worked.
3. There is a written contract that states the
salesperson shall be treated as an independent
contractor for tax purposes.
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There is only one employing broker or agent in
any one real estate establishment.
Designated broker must supervise sales person
activities as per the law.
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Broker Anderson owns a real estate office. Broker
Rooks and Broker Ford work in the office with 5
salespersons. Broker Anderson sells 2 homes per
month. Broker Rooks reviews all the paper work
and signs the paper work. Broker Ford is the top
producer with the sale of 5 homes per month.
Who is the broker in the office?
Broker Rooks
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Broker Jones owns Sunshine Realty and has 5
offices. There are offices in city 1, city 2,
city 3, city 4, and city 5 of the state of
California and all are under the same corporate
structure called Sunshine Realty.
How many brokers will Jones need to run all five
offices?
ONE
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Broker Jones owns Sunshine Realty and has 5
offices. There is an office in city 1, city 2,
city 3, city 4, and city 5 of the state of
California. Each of office is called Sunshine
Office 1, Sunshine Office 2, etc. Each office is
under its own corporation or name. How many
brokers will Jones need to run all five offices?
FIVE
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Agent One who represents another, called the
principal, in dealing with a third person for a
commission.
A Real Estate broker acts as an agent for the
principal who wishes to sell, buy or exchange
real property, or a business opportunity.
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AGENCY DISCLOSURE Any licensee must disclose his
or her agency.
An agent is one who represents the principal, and
is called an agent.
The word, agent, is synonymous with the employing
broker
There is only one employing broker or agent in a
real estate company.
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TAXES The agent has to pay his/her own taxes owed.
PROBLEM Mr. Montegudo is a new real estate agent
and earns 20,000 in commissions his first year
in the real estate business. He has 8,000 in
real estate expenses. He also owns a home and
pays 12,000 in interest on his home. How much
does he have to pay in taxes?
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Schedule C Income 20,000Expenses 8,000Profit
12,000
1040 Income (Sch. C) 12,000Itemized
deductions 12,000Taxable Income 0 Taxes
Owed 0 Property taxes, home interest, and
contributions.


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Social Security Tax Profit 12,000SS Tax
Rate 15SS Tax 1,800

On federal and state tax returns there are
different tax brackets.

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CHOOSING A BROKER The new agent should remember
that the interviewing broker wants good agents. A
new agent should interview him or her to make
sure they are giving the new agent education and
help that will make him or her successful.
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Choose an office . . . that offers a good
training program. that offers assistance when
you need it. An office that has a designated
person in charge of your training is a definite
plus. One good example is a mentor program. that
has a good library of books, audiotapes, CDs and
videos available for your use.
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that is primarily devoted to the area or real
estate that you want to practice in, for example,
sale of homes and/or lease in the real estate
specialty area you desire to work in. that will
help you in promoting your business, such as
through advertising and a Web Site. that is
comfortable for you. You must feel comfortable
with the broker, your coworkers and the
operation of the office. If you are
uncomfortable, your chances of success are going
to be materially diminished.
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MULTIPLE LISTING SERVICE MLS The MLS is part of
the board of realtors.
Most brokers today belong to one or more MLS
services.
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Real estate salespersons should continue seeking
training in their profession.
Real estate is a changing profession.
The deposit receipt has minor changes every six
months and major changes about every 3 years.
At one time, the deposit receipt was one page on
legal size paper. Over the years it grew to six
pages, and now it has eight or ten pages (letter
size), plus disclosure statements (another one to
20 pages).