How a real estate

By Alexis A. Acacio, contributor
Inquirer News Service

(First of two parts)

A REAL estate broker is your partner and adviser in your real estate transactions. Knowing the process in which the broker works can make one understand them better and therefore make the most of the relationship. As with any relationship, trust is very important and before this trust can be developed, the process on how brokers work can make us understand them better.

Real estate brokers are engaged in real estate transactions in behalf of a principal.

The broker expects a commission or a fee by negotiating for the sale, lease, purchase, mortgage or joint venture of real estate properties. He/she acts in behalf of a principal. The principal, in most cases, is the owner or developer of the property.

Real estate brokers involved in the selling and buying of real estate generally follow the following steps in going about their profession.

Secures properties for sale. The broker secures an authority from a seller to negotiate for the sale of a property. He/she may also secure an authority from a buyer of a specific property. A broker for the lease, mortgage or exchange of property also obtains a similar authority. This process is called obtaining a listing (meaning a list of properties to negotiate for). During this process, the broker assesses the type and condition of the property, the specific location and description of the property, where it is, the condition of the title (whether it is authentic, mortgaged or not, clean or with a lien. etc.). He/she gets an authority to negotiate for the sale of a property from the owner that can either be exclusive or nonexclusive.

In an exclusive authority, only one listing broker is authorized to negotiate the transaction. This is common for large development projects in which the developer assigns a sales organization to market, present and negotiate for the sale of real estate properties. The exclusive marketing agent then focuses all its efforts to sell the entire project. In return, the developer or owner gives full support to its exclusive marketing agent in terms of higher commissions, office spaces, tripping vehicles, sales incentives, etc.

In a nonexclusive authority, the owner authorizes two or more brokers to negotiate for the real estate transaction. This is dealt with on a first-come, first-served basis. Most single transactions involving brokers is the nonexclusive type-that is many brokers may be selling the same property so it is common that the same property may be shown to a prospective buyer by many other brokers.

Looks for interested parties. After securing a listing, the broker looks for interested buyers of the subject property. If the broker is a member of a real estate association or belongs to a circle of brokers, the listing is relayed to other brokers to increase the network of interested buyers. In real estate transactions, the sale or purchase of a property seldom involves a single broker. It is usually the effort of the seller's broker (the broker represents the seller) and the buyer's broker (the broker represents the buyer). In this case, the commission is split between the brokers in the transaction according to the agreed upon percentages.

A source of listing also includes the list of foreclosed properties that can be obtained from the asset management groups of banks and lending institutions. An advertisement in daily newspapers, radio and televisions is also a source of information for brokers. Try advertising your property in the classified ads and it is highly possible that of all the callers, there will be more brokers than direct buyers.

As brokers expand their network, they continuously secure available properties and they become known within an area among persons involved in real estate transactions.

Qualifies interested parties. After the real estate broker connects with the interested party, whether seller or buyer, the interested party should be a qualified one. A quick definition of a qualified prospect would be that he or she is able, willing and legally capable. If loan officers of banks have prequalifying criteria, so do real estate brokers. The criteria include:

· Real need. The reasons for buying real estate can be many-as a hedge against inflation, for use, for rental, as an investment and even to speculate that property values will go up in the future. The broker might not ask the buyer directly but would try to figure out the real reason the client would want to buy the property. A specific type of property satisfies a specific need.

· Capacity to pay. The client should have the capacity to pay. Based on my experience in marketing real estate, some buyers simply have the "want" or desire to own a property but they simply do not have the capacity. It is best that we have a realistic sense of the property we want and the property that we can afford. Want and affordability should match in order to make the real estate transaction a reality.

· Authority to buy. The person usually looking at a property is the buyer. But these days, some buyers buy for their busy relatives and their relatives abroad. It is common these days that the person paying for the property is out of the country and he/she simply relies on photographs of the property and other information that is sent to him/her. These people simply ask their relatives to buy in their behalf. Again, the person looking at a prospective property should have the authority to buy.

Do not get offended if your broker asks you details about some "personal" things especially when it comes to financial capacity. Brokers just want to make sure that they are not wasting their time on prospects who are not qualified. To show a piece of property to a client takes time-even days and the broker just wants to make sure that he/she is not wasting his/her time on a client who is only a "window shopper."

Brings prospective buyers to the properties. Tripping is the common term that real estate brokers use to show a prospective client a property that they feel would suit the needs and budget of their client. If the property being sold was a piece of gadget being brought to the customer's house, then it would be called a "demo." But since real estate is fixed and the customer should go and visit the property, then a trip is necessary, hence the word tripping is commonly used. Selling real estate is a long process and usually takes some time before a purchase decision is made.

During this process, the property is shown to the client and the features are explained in detail. If it is a vacant lot, the features of the lot are studied such as the topography, the shape, the boundaries and the other natural factors. If it is a subdivision lot, the entire subdivision is studied, the neighbors, the streets, drainage systems, availability of water supply, security, etc. If the property being considered is a structure such as a house, townhouse, condominium, industrial building or a commercial building, the various features of the structure are shown and discussed in detail.

A good broker should be quick to surmise when the property shown to a prospective client fits his/her needs. Some brokers simply force properties that clients do not want or simply could not afford. As a real estate broker myself, what I have discovered through the years is that it is best to be an adviser when it comes to fulfilling the needs of buyers. Brokers need to listen to the real needs of their clients before they can really sell.

Remember that your real estate broker is not your personal driver. Be courteous enough to arrange for a meeting site that would be convenient for both parties.

Once you have selected the property that you would want to own, it is now time to close in on the deal. This will be our topic for next week.

(Alexis A. Acacio is an associate professor of civil engineering at the University of the Philippines. He is also a marketing and technical consultant to various real estate developers and construction companies. For comments and advice you may reach him at aaacacio@pacific.net.ph or fax +632 932-6986.)