Monthly Archives: July 2016

Commercial Real Estate Leasing Guide

Commercial real estate lease is a contract that creates and defines the legal relationship between the landlord or lessor and the tenant or lessee. In exchange for payment of rent and other considerations, the landlord grants to the tenant the right to possession and use of all or part of the property, subject to certain terms and conditions, for a specified period of time. In most types of commercial real estate, leasing provides the bulk of revenues available to service the mortgage loan; thus, understanding and accurate evaluation of lease terms and conditions is crucial to underwriting a loan. Lease obligations often require post closing management by loan administrators as well.

There are two primary considerations from the investor’s perspective:

  • Poorly drafted leases can create economic problems for the borrowers, which may put at risk his or her ability to make loan payments.
  • If the investor takes the property back, he or she will have to live with the terms and conditions of the lease, unless provision is made that the investor has the option to terminate it. In most foreclosure situations, however, tenants paying rent are a valuable commodity.

The rules and regulations should be understood before leasing the property, and an agreement should be drafted. There are some items to be followed.

  • It must be perfectly defined and include all details of the parties of the lease, including the correctly-spelled full name of each party, the nature of the legal form, and the state of domicile for the partnership, or corporation. Individuals may sign for themselves, any general partner for a partnership, and the president or secretary for a corporation. If there is any question on a corporation, a copy of the resolution of the board of directors granting signing authority should be attached. If the signer is acting as an agent for a principal, written authority from that principal should be attached.
  • Demised premises should be precisely identified, in terms of building address, floor number, suite and store number, and area in square feet to be leased. A floor plan or drawing of the space in relation to the entire property is very helpful. Inadequate identification can invalidate the lease. The lease should also state whether parking rights are exclusive or nonexclusive, and whether specific parking spaces are designated for the tenant. For parking, separate charges should be noted by the reviewer.
  • The term of the lease should be stipulated, in years and odd months. Lease commencement and termination dates should be clearly stated, as well as the date on which the first rent payment is due. Any renewal options should also be noted.
  • The tenant should clearly understand exactly how the rent and contributions for expenses are to be paid, because there are considerable variances, even within a given market.
  • The lease should define a number of conditions for maintenance, utilities, and equipment. The tenant’s obligations related to repairs should be clear to ensure they maintain the space in good order. The tenant’s rights to alter the leased space must also be carefully defined.
  • If the landlord abates rent during restoration and agrees to restore it in a reasonable time, the tenant cannot cancel the lease or sue the landlord for a breach of the lease if the tenant’s space is damaged.
  • The lease should be clear that it is retained by the landlord. In the age of sometimes-unnecessary lawsuits, the landlord may be sued because of external environment problems beyond his control.
  • The rules and regulations of the building should be attached as an exhibit to the lease.

How to Get a Real Estate License

A career in real estate can be highly rewarding. To be able to sell real estate, it is mandatory to obtain a license.

A career in real estate is becoming increasingly popular and can be a lucrative and challenging option. Apart from the knowledge and experience required to excel at this business, obtaining a license is also very essential. To be able to be an agent or a broker, a license is mandatory. The licensing procedure is different in every state and the State Real Estate Commission lays down the requirements and specifications for the same. The common steps to get a license would be to fulfill the minimum age requirements, the educational qualifications, experience requirements, and qualify the licensing examination. Specifications regarding the amount of training required, the length, and method of study, vary from state to state. The procedure in some of the states is mentioned below.

Obtaining a New York License

To obtain a New York real estate salesperson license you would require the following:

  • Should be 18 years of age or above
  • Should complete 45 hours of Qualifying Real Estate Courses
    Successfully qualify The New York Real Estate Examinations
  • Should complete and submit a Child Support Statement

To obtain a broker license you would require the following:

  • Should be 19 years of age or above
  • Should be a resident of New York City or should be admitted for permanent residence by law
  • Should have a minimum 1 year experience either as an active licensed real estate salesperson or in the real estate business.
  • Should complete 90 hours of specific approved Real Estate Courses. Those having a degree with real estate majors can apply for a waiver of the courses.
  • Should successfully qualify The New York Real Estate Examinations.
  • Should apply within two years of qualifying the exams.
  • Should have a valid business address
  • Should complete and submit a Child Support Statement

License renewal is required for both brokers and salespersons, every two years.

Obtaining a California License

To obtain it in California, you would require the following:

  • Should be 18 years of age or above
  • Should provide proof of being a legal US resident and of being free from conviction of crime.
  • Should be willing to provide fingerprints.
  • Should complete 3 Real Estate Courses, as per the specifications of The Department of Real Estate, before or within 18 months of qualifying the Real Estate examination.

To obtain a broker license, you would require the following:

  • Should be 18 years of age or above
  • Should provide proof of being a legal California resident. In case of being a resident of another state, a consent to Service of Process with The Department of Real Estate should be filed.
  • Should provide fingerprints.
  • Should have a minimum 2 years experience either as an active licensed real estate salesperson or in the real estate business.
  • Should successfully complete 8 approved college-level courses before qualifying the Exam.

License renewal is required for both brokers and salespersons, every four years.

Obtaining a Florida License

To obtain an associate’s license in Florida, you would require the following:

  • Should complete 63 hours of classroom training of the Florida Real Estate courses.
  • Should fulfill post-licensing educational requirements.
  • Should qualify the exams with a minimum grade of 75.
  • Should submit Form Re 2050-1 for activation of the license after qualifying the examination.

To obtain a broker license you would require the following:

  • Should have an active sales associate license.
  • Should have a minimum 12 months experience in real estate during the 5 year period after the application.
  • Should have completed 72 hours of classroom training of specific Florida Real Estate courses.
  • Should qualify the exams with a minimum grade of 75.
  • Should submit Form Re 2050-1 for activation of the license after qualifying the examination.

To obtain an agent license you would require the following:

  • Should be 18 years of age or above.
  • Should have a high school diploma or its equivalent.
  • Should be free from conviction of crime and should provide fingerprints.
  • Should complete courses as per the specification of The Florida Real Estate Education Requirements.

The training required to meet the requirements of these examination is provided by many colleges and many online study programs are also available. Since licensing is state-specific, you will need to do a lot of research in order to obtain the right information regarding the procedure in your state. Once you select the appropriate course and qualify the examination, you can successfully obtain the real estate license.

Developing Your Real Estate Marketing Plan

You have just begun an ambitious plan of setting up your very own real estate business and you are in need of some marketing ideas. Here are some ideas for people like you out there.

For any kind of business to prosper, what you need, besides quality service, is marketing. It is all about developing your contacts and networking among the populace. So, marketing is the heart and soul of the real estate business.

Market Research: The Foundation

Without research, you cannot understand whom to market your services. You have to identify your target clients and the nature of market dynamics in your area. Know the needs of your clients, identify your competitors, and what kind of facilities they are offering to clients.

You must have a detailed information database of real estate prices in your target areas. Also, make a record of recent sales and purchases in your area, if possible. Once you finish your research, you will know your target clients, interested in real estate investment, their needs, the options to fulfill their needs, the realtor competition, and their tactics. Knowing all these, now you can devise your marketing plan, that will create your contact network and help you in aggressively competing in the field, for your share of clients.

Marketing Ideas

Here are some marketing tips that will help you to net clients.

Business Cards
Business cards, the traditional marketing tools, are still the most important forms of marketing. Personally meet and distribute your agent card in business circles, as well as to prospective buyers and sellers. What people want is a person whom they can trust, to find a buyer for their property or who can find them a place in a good locality, providing help in transactions along the way. Give that personal touch in your marketing, rather than just relying on huge banner advertisements.

Advertise in Newspapers
Internet is overtaking the print media slowly and surely, in popularity. Still, newspapers remain the best options for placing your real estate advertisements. Place your advertisements and listings of properties available for lease and sale, along with your contact number.

Advertise on the Internet
Start your own site on the Internet through web designing, which will have all the detailed listings of properties, which are available for lease or sale. You can even set up an interface, wherein prospective buyers could enter their expected real estate investment demands and sellers can fill in theirs. This way, you can get clients online.

Referrals from Past Clients
Encourage referrals from past clients and provide them with some incentives for the same. If you will offer good service to clients, your name as a good agent is going to spread by word of mouth.

If you keep improving and innovating your quality of service, people are bound to remember you as the guy who got them their dream home. Provide a detailed brochure of information about the locality to clients shopping for a home. You can provide additional value-added services like helping clients to get mortgage loans. This can include photos as well as information about events in the area. Never forget the personal touch.

Hope these ideas have given you some food for thought. You could come up with more innovative marketing ideas, if you really put your thought into it.

Real Estate Agent Commission

It is common knowledge that a real estate agent will charge you a commission whenever he carries out any real estate transaction. Moreover this commission varies according to the type of real estate and geographical area. The following article tries to explain the role of an agent or broker, his commission and closing costs.
Any person who has been authorized by his or her client to act as an agent in the sale or purchase of land is a realtor. It can be a person, group of persons, firm or a company. In United States the licensed real estate brokers are authorized to make real estate sales and purchases. The Department of Real Estate or the Department of Licensing of the State government provides the realtor with licensing or authorization to sell. In some cases, the Real Estate Commission (regulatory body) also provides authorization. The people who hold valid license are known as real estate brokers. On the other hand a person who does not hold a license but works under a licensed broker is known as a salesman or a real estate agent. Commission earned by the either varies from case to case and also from state to state. Though the real estate commission rates vary as per states, the average commission charged by realtors is about 6% of the deal, with several commission dropping down to 5.2% or some prices rising to 6.5%, in really costly deals.

Real Estate Agent and Broker

As mentioned above, the real estate market in United States is accessible through licensed brokers , who are empowered to either sell or either officially inquire for purchase. The real estate brokers have a team of agents working as their employees. These agents are largely classified into listing agents and selling agents.

The listing agents do the job of finding a real estate through the Multiple Listing Service as per the specifications of their clients. The selling agents as the name suggests, do the job of finding potential customers for the real estate. Now when a property is sold, both the listing and selling agents become involved in the deal. The commission split, in a majority cases, is a straight 50:50 split. However, in some cases one agent many end up getting more or less, as per the circumstances. The commission is though paid to the broker, a part of comes down to the agent along with the conventional real estate agent salary. This kind of mechanism is seen in almost all real estate deals. In some cases, the agent receives the commission and then a small portion is forwarded to the brokerage firm.

Real Estate Agent Commission

The standard commission is often affected as a result of several factors such as the selling price or the buying price of the property. The commission in several cases, is also affected by the time span within which the real estate was sold. The commission in such circumstances is in the form of cash. However the norms of Real Estate Settlement Procedures Act are applicable to the act, meaning that the agent cannot give off any favors or deal in kickbacks. The customer or client is protected by the Department of Housing and Urban Development.

Some commission rates, as of 2010, have been listed below:

  • Delaware: about 5.7%
  • Idaho: about 5.1%
  • Hawaii: about 5.5%
  • California: about 5.2%
  • New Hampshire: 5%
  • Tennessee: 5.6%
  • Wyoming: about 5%
  • Alabama: 5.3%

This commission is subject to change and it must be also noted that there are several agents or broker firms who provide certain legal documents and registration, transfer, assessment and appraisal services, for which they charge extra.

The problem is commission on real estate marketing is not mandated by any certain body, it is just ascertained by convention. Most of the agents and broker firms disclose all closing costs and charges to their clients, hence you can take multiple opinions while signing the attorney documents or any contractual document.