Understanding the Different Real Estate Designations in California: Agent, Broker, Realtor, and Salesperson

Getting into the real estate industry can be a fulfilling choice, offering financial reward and an opportunity to meet and work with different people. In California, one of the most vibrant real estate markets in the country, you will encounter various designations like agent, broker, realtor, and salesperson. It can be confusing initially, but each designation represents a different level of responsibility, training, and competency. Let’s dive in and understand each one.

Real Estate Salesperson: The Entry-Level Designation

The entry-level designation in the California real estate industry is the Real Estate Salesperson. It’s the perfect stepping stone for individuals venturing into the real estate realm.

Steps to Become a Real Estate Salesperson in California:

  1. Complete 135 hours of pre-license education, which include Real Estate Principles, Real Estate Practice, and one elective course.
  2. Pass the salesperson examination.
  3. Submit a salesperson license application along with required documentation and fees.

What Can You Do as a Real Estate Salesperson?

As a licensed Real Estate Salesperson, you can represent buyers or sellers in real estate transactions, but you must work under a supervising real estate broker. You cannot operate independently or open your own brokerage.

Real Estate Agent

In California, the term ‘Real Estate Agent’ is often used interchangeably with ‘Real Estate Salesperson.’ Both require the same training, testing, and supervision under a licensed broker.


 

Real Estate Broker: The Next Level Up

Most people, after gaining sufficient experience and education as salespersons, decide to level up their career by becoming a Real Estate Broker.

Steps to Become a Real Estate Broker in California:

  1. Gain at least two years of full-time licensed salesperson experience within the last five years.
  2. Complete 360 hours of approved real estate courses.
  3. Pass the broker examination.
  4. Submit a broker license application with necessary documentation and fees.

What Can You Do as a Real Estate Broker?

Brokers can perform the same tasks as a salesperson, but with additional benefits. They can work independently, operate their own business, and hire salespersons to work under them. This ability to manage their own firm often leads to higher earnings.

Do Brokers Make More Money?

Typically, brokers earn more than salespersons due to their advanced level of responsibility and the ability to run their own brokerage. They can make money from their transactions and also earn a portion of the commissions from salespersons working under them. However, the increased earnings also come with increased responsibility and overhead costs.

Realtor: A Mark of Professionalism and Ethics

‘Realtor’ is not a designation per se, but a registered trademark of the National Association of Realtors (NAR). Any real estate professional who is a member of NAR is allowed to use this title.

Steps to Become a Realtor:

  1. Obtain a valid real estate salesperson or broker license.
  2. Join your local real estate board or association affiliated with NAR.
  3. Adhere to NAR’s stringent Code of Ethics and Standards of Practice.

What Can You Do as a Realtor?

Realtors can do everything that a salesperson or broker can do, depending on their license type. The Realtor designation is a symbol of professionalism and commitment to ethics, helping them to stand out in the market and build client trust.

The Journey from Salesperson to Broker: Is it Common?

Many salespersons do choose to become brokers, but not all. The decision largely depends on career goals. If you aim to run your own business and are prepared for the responsibilities that come with it, then becoming a broker could be an excellent next step.

Final Thoughts

In conclusion, each designation within the real estate industry represents a different level of professional development. Starting as a salesperson allows for a great introduction to the industry, and moving up to become a broker can offer greater financial and professional independence. The Realtor designation adds an extra layer of professional and ethical reputation. Choose the path that best aligns with your professional aspirations and enjoy the journey in the exciting world of real estate.

Remember, real estate is not just about transactions; it’s about building relationships and trust. Regardless of your designation, your success will depend largely on your commitment, integrity, and dedication to your clients’ needs and dreams. Good luck on your real estate journey!

Real Estate Terminology: Due Diligence

Getting your feet wet in the exciting world of real estate? It’s crucial to grasp the terminology that fills the industry, and one term you can’t afford to ignore is “due diligence.” Today, we’re focusing on this term’s application in the California real estate market.

Defining “Due Diligence” in Real Estate

The term “due diligence” refers to the steps that a prudent person should take to ensure that they’re making a well-informed decision, typically before finalizing a financial transaction or a legal obligation. In real estate, due diligence is the process of investigating a property before buying, including verification of all data, inspections, and compliance with all relevant laws and regulations.

The Importance of Due Diligence in California Real Estate

California is a unique real estate market. With diverse properties ranging from stunning beachfront homes to high-rise apartments in bustling cities, potential risks and rewards abound. However, the state’s stringent environmental regulations and strict zoning laws mean due diligence is particularly important.

  • Environmental laws: Properties in California must comply with a plethora of environmental regulations, including laws related to seismic safety, wildfire risks, and flood zones.
  • Zoning laws: California has strict zoning laws that dictate the use of properties, which can significantly affect their value.

Conducting thorough due diligence ensures you’re not caught unawares by any unforeseen issues, helping protect your investment.

The Elements of Due Diligence in California Real Estate

Carrying out due diligence involves an exhaustive review of various aspects of the property. This can be categorized into several key elements.

Property Inspections

A comprehensive inspection is the first step in the due diligence process. This involves:

  • General home inspection: This evaluates the property’s structural integrity and checks for any issues such as mold, pests, or water damage.
  • Specialized inspections: Depending on the property’s location and type, additional inspections might be necessary, such as a geological inspection for hillside homes or a seismic safety inspection in earthquake-prone areas.

Title Review

The title review involves assessing the legal ownership of the property. It ensures the seller has the right to sell and there are no outstanding liens or encumbrances on the property.

Compliance Checks

This step involves checking the property’s compliance with local and state laws, including:

  • Environmental laws: Ensure the property meets California’s environmental standards.
  • Zoning regulations: Check if the property complies with local zoning laws and restrictions.

Review of Financial Aspects

Evaluate the financial viability of the property, which might include understanding the property taxes, assessing repair costs, and estimating potential rental income.

Real-world Example of Due Diligence in California Real Estate

Let’s illustrate due diligence with an example. Imagine you’re considering purchasing a beachfront property in Malibu. Here’s how due diligence might unfold:

  1. Home Inspection: A general inspection reveals that the house is structurally sound but needs roof repairs.
  2. Specialized Inspections: An environmental inspection identifies that the property lies in a flood zone. A geological inspection suggests potential landslide risks.
  3. Title Review: The title review reveals the seller is the legal owner, but there’s an existing lien from a unpaid contractor.
  4. Compliance Checks: The property complies with zoning laws but needs additional flood insurance due to its location.
  5. Financial Review: After assessing the repair costs, potential flood insurance, and the market value of similar properties, you decide the price is too high given the identified risks.

Without thorough due diligence, you might have proceeded with the purchase only to face unexpected costs and risks.

Conclusion

As you embark on your journey as a real estate agent in California, understanding and conducting due diligence can save you and your clients from potential pitfalls, ensuring a smooth transaction. While the process might seem overwhelming, taking the time to scrutinize every detail can protect your investment, reputation, and client satisfaction.

Remember, due diligence is more than a phrase—it’s your safeguard in the world of real estate. Embrace it, and you’ll be well on your way to success in California’s real estate market.

Real Estate Terminology: Closing

The real estate industry is a complex world of intriguing jargon, and understanding these terms is critical for anyone planning to venture into this lucrative sector. A vital term you must get acquainted with is “closing”. This article will thoroughly explain the term “closing” as used in California real estate, giving future real estate agents a leg up on their journey. Buckle up and let’s delve into the world of real estate closings!

Understanding ‘Closing’

Closing, often referred to as “settlement” or “escrow” in California real estate, marks the final step in a real estate transaction. It’s the long-awaited day when the buyer officially acquires the property from the seller. Upon closing, the property’s title is transferred from the seller to the buyer, all financial transactions are settled, and the buyer gets the keys to their new home.

The Closing Process

Closing a real estate deal involves several steps:

  1. Opening an escrow account: An escrow account is opened to protect the buyer’s earnest money. This account holds all the documents and funds required for the transaction until the deal is closed.
  2. Fulfilling the contract conditions: The buyer and seller must meet all conditions outlined in the purchase contract. This may include property inspections, repairs, appraisal, and obtaining financing.
  3. Preparing and reviewing closing documents: All necessary documents are prepared, reviewed, and signed. These documents can include the deed, bill of sale, affidavit of title, and others.
  4. Closing the escrow: Once all conditions are met and documents signed, the escrow is closed. The seller receives the payment, and the buyer officially becomes the homeowner.

Key Players in a Closing

In a California real estate closing, there are several key players:

  • Buyer: The individual or entity purchasing the property.
  • Seller: The current property owner.
  • Real estate agents: These are the professionals representing the buyer and seller.
  • Escrow officer: This is a neutral third party who oversees the closing process, ensuring that all conditions are met before funds and property change hands.
  • Lender: If the buyer is taking out a mortgage, the lender will play a significant role in the closing process.

Documents Involved in a Closing

Here are some essential documents involved in a closing:

  • HUD-1 Settlement Statement: This document itemizes all charges imposed on the buyer and seller.
  • Final TILA statement: This outlines the cost of the loan and the annual percentage rate.
  • Mortgage Note: This is a legal document by which the borrower agrees to repay the loan.
  • Mortgage or Deed of Trust: This document secures the note and gives your lender a claim against the home if you fail to meet the terms of the loan agreement.
  • Certificate of Occupancy: For newly constructed homes, this document allows the buyer to move in.

Costs Associated with Closing

Closing costs are fees paid at the close of a real estate transaction. They can range from 2% to 5% of the purchase price and may include:

  • Loan origination fees: These are fees charged by the lender for processing the new loan.
  • Appraisal fee: The fee for a professional to assess the home’s market value.
  • Title insurance: This protects the lender and owner against claims or legal fees that may result from disputes over the property’s title.
  • Escrow deposit: Often, buyers will have to deposit funds that will be used for upcoming property taxes and mortgage insurance.
  • Inspection fees: Fees for home inspection, termite inspection, etc.
  • Recording fees: Fees to legally record the new deed.

Final Thoughts

Understanding the concept of ‘closing’ in California real estate is a fundamental part of becoming an effective real estate agent. It might seem overwhelming at first, but once you understand the process and all its components, you’ll be well on your way to successfully facilitating real estate transactions.

Remember, every successful closing is a testament to a well-executed transaction and a satisfied customer, so equip yourself with all the knowledge necessary to ensure a smooth, efficient process. As a future real estate agent, you have a rewarding journey ahead.

Decoding Real Estate Terms: Understanding ‘Buyer’s Agent’ and ‘Listing Agent’

Real estate transactions are complex, and having a competent professional by your side can be incredibly beneficial. Two essential roles in real estate transactions are the “Buyer’s Agent” and “Listing Agent.” But what do these terms mean? And if you want to become a real estate agent, which one should you be? This comprehensive guide aims to simplify these critical concepts for you.

Understanding Real Estate Agents

Before we delve into the specific roles of a buyer’s agent and a listing agent, it’s important to understand what a real estate agent does. A real estate agent is a licensed professional who assists individuals in buying, selling, or renting properties. They earn their income through commissions, which are percentages of the sale price or rent.

What is a Buyer’s Agent?

A buyer’s agent, also known as a purchasing agent, is a real estate professional who represents the buyer in a property transaction. The buyer’s agent’s primary responsibility is to protect the buyer’s interests by finding suitable properties, negotiating the best price, and guiding them through the purchase process.

The buyer’s agent duties often include:

  • Understanding the buyer’s needs and budget.
  • Searching for properties that meet the buyer’s criteria.
  • Scheduling viewings of potential properties.
  • Advising on the local real estate market.
  • Assisting in making an offer and negotiating terms.
  • Coordinating inspections, appraisals, and other aspects of the closing process.

What is a Listing Agent?

A listing agent, sometimes referred to as a seller’s agent, represents the property seller. Their primary responsibility is to help the seller set a competitive price for the property, market it effectively, and handle negotiations with prospective buyers.

The tasks of a listing agent typically include:

  • Assisting in pricing the property.
  • Advertising the property through various channels.
  • Organizing and hosting open houses.
  • Negotiating offers to get the best price and terms for the seller.
  • Coordinating the sale process until the closing.

Examples of Buyer’s Agent and Listing Agent Roles

To understand these roles better, let’s look at some practical examples:

  1. Buyer’s Agent: John is looking to buy a house but is unfamiliar with the process. He hires a buyer’s agent, who helps him understand his budget, find suitable houses, negotiate prices, and navigate the purchase process.
  2. Listing Agent: Sarah wants to sell her house but isn’t sure how to price it or where to advertise it. She hires a listing agent, who helps her price her house competitively, advertises it across various platforms, organizes open houses, and handles negotiations with potential buyers.

Choosing the Right Agent for Your Needs

Now that we’ve clarified the roles of the buyer’s agent and the listing agent, it’s important to note that not all agents are created equal. Some agents specialize in working with sellers, while others primarily work with buyers. Some do both. When choosing an agent, consider their experience, local market knowledge, communication style, and reputation.

Considerations If You’re Becoming An Agent

If you’re considering a career in real estate, you may be wondering whether to become a buyer’s agent or a seller’s agent. As described above, a buyer’s agent will assist clients in finding and purchasing properties, while a seller’s agent helps homeowners sell their properties. The choice depends on your preferences and strengths. If you enjoy guiding buyers through the purchasing process, being a buyer’s agent may be right for you. If you excel in marketing and negotiation, becoming a seller’s agent could be a better fit. Some agents specialize in one role, while many handle both. Continuous learning and exceptional service are essential for success in either role.

Conclusion

The terms ‘Buyer’s Agent’ and ‘Listing Agent’ refer to professionals who represent the buyer and the seller in a real estate transaction, respectively. While their ultimate goal is the same – to facilitate a successful real estate transaction – their specific roles and responsibilities differ. Whether you’re buying or selling, understanding these roles can help ensure that you choose the right professional to assist with your needs, making your real estate journey much smoother and more rewarding.

Real Estate Terminology: Real Property

Understanding real estate terminology is a fundamental part of buying or selling property. This blog post dives deep into one of the most used terms, “real property”. We’ll discuss what it means, its importance, different types, and how it is distinguished from personal property. Buckle up for this in-depth exploration.

Understanding Real Property: A Definition

Real property, often simply called “real estate,” refers to land and anything attached to it or built on it, including buildings and structures, along with the rights associated with owning the land. This definition may seem straightforward, but there’s more to it when you begin to understand the nuances and implications.

The term “real” in real property is derived from the Latin word “res”, meaning “thing.” Therefore, real property is “real” because it’s physical, tangible, and can’t be moved or lost as easily as other assets. Understanding this can provide you with a deeper insight into why real property is such an important asset class.

Importance of Real Property: The Cornerstone of Wealth

Real property often represents a significant portion of an individual’s or corporation’s wealth. Here are the key reasons why real property is crucial:

  • Asset Appreciation: Real property, particularly land, tends to appreciate in value over time. This makes it a favored investment avenue for many.
  • Collateral for Loans: Real property can be used as collateral to secure loans, providing financial flexibility.
  • Income Generation: Renting or leasing out real property can generate consistent income.
  • Tax Advantages: Many countries offer tax benefits linked to owning and investing in real property.

Classifying Real Property: Breaking it Down

Not all real properties are the same. They are generally classified into three main categories:

  1. Residential Property: This category includes homes, apartments, townhouses, and vacation properties. Essentially, any property designed for people to live in.
  2. Commercial Property: These properties are designed for businesses. They include office buildings, warehouses, retail spaces, and shopping centers.
  3. Industrial Property: These properties include factories, mines, farms, and any land used for manufacturing goods or extracting minerals.

Real vs. Personal Property: The Critical Distinction

A common confusion in real estate is the difference between real and personal property. Personal property refers to anything that can be moved and is not permanently attached to the land. Here are some examples to clarify this distinction:

  • A built-in dishwasher in a house is considered real property as it is fixed and integral to the house. On the other hand, a freestanding refrigerator can be easily moved and is therefore personal property.
  • A tree growing in the yard is real property as it is permanently attached to the land. However, a potted plant, although it’s living and placed on the property, can be easily moved and is therefore personal property.

This distinction becomes especially important during the sale of a property. Generally, the sale of real property includes the land, the structures built on it, and anything permanently affixed to those structures. However, personal property is usually not included unless specified in the agreement.

The Legal Side of Real Property

When you own real property, you don’t just own the physical land and structures; you also own a bundle of legal rights associated with the property. These generally include:

  • Right of Possession: The right to occupy the property.
  • Right of Control: The right to control the property’s use within legal limits.
  • Right of Exclusion: The right to prevent others from entering the property.
  • Right of Enjoyment: The right to enjoy the property as you wish.
  • Right of Disposition: The right to sell, rent, or transfer ownership of the property.

Conclusion: Embracing Real Property

Understanding the concept of real property and its distinction from personal property is essential for any real estate endeavor. Whether you’re a real estate agent, a first-time buyer, a seasoned investor, or just trying to increase your general knowledge, this understanding can prevent confusion and potentially costly mistakes.

If you’re thinking of becoming a real estate agent, real property is just one of many terms you’ll come to understand. Our blog has in-depth explanations of many real estate terms, and you’ll master them all through our pre-license course.

Real property is more than just land and buildings; it’s a cornerstone of wealth, an investment opportunity, and an avenue for income generation. So, whether you’re dreaming of that perfect home, planning your next big investment, or exploring your rights as a property owner, remember to think about real property’s implications. Because when it comes to real estate, it’s more than just bricks and mortar—it’s about understanding the ‘real’ in real property.

Real Estate Terminology: Bundle of Rights

The real estate industry has a unique vocabulary that can confuse newcomers. One frequently mentioned term is the “bundle of rights.” This guide clarifies this essential concept and its significance in real estate transactions.

What is the ‘Bundle of Rights’?

The ‘bundle of rights’ is a metaphor used in real estate to describe the range of legal rights that an owner has over a property. It comprises five core rights: possession, control, enjoyment, exclusion, and disposition. Collectively, they provide the owner with full legal control over the property, allowing them to use, lease, sell, or even do nothing with it.

The Five Rights in the Bundle

The ‘bundle of rights’ can be compared to an actual bundle of sticks, where each stick represents a distinct right. Let’s break down these five ‘sticks’ in the real estate bundle of rights:

1. Right of Possession

The right of possession is the right to own the property. As long as the property is legal and the owner has a valid title, they can claim ownership.

2. Right of Control

This right grants owners the power to manage and use their property as they see fit, within the bounds of local and federal laws. This can include deciding the property’s aesthetics or determining its function.

3. Right of Enjoyment

The right of enjoyment permits owners to use and enjoy their property peacefully, without interference. If disrupted (for example, by a nuisance), they have legal grounds to seek remedy.

4. Right of Exclusion

The right of exclusion allows owners to prevent others from trespassing or entering their property. Owners can selectively grant access, such as through leasing or easements.

5. Right of Disposition

The right of disposition provides the owner the ability to transfer ownership, either temporarily (such as leasing or renting) or permanently (via selling or gifting). It also allows them to leave the property to a beneficiary in their will.

Examples of How These Rights Work

To better understand the bundle of rights, let’s consider a few practical examples:

  1. Right of Possession: John buys a home. The title of the property is transferred to him, and he now has the right of possession.
  2. Right of Control: Sarah, a farm owner, decides to convert a portion of her farm into a campsite. This is an example of her exercising her right of control.
  3. Right of Enjoyment: Suppose a noisy factory opens near Mike’s house and the constant noise disrupts his peaceful enjoyment of his property. Mike can seek legal recourse because his right of enjoyment is being violated.
  4. Right of Exclusion: Mary, an apartment owner, rents out her property to tenants. She has the right to exclude anyone not permitted by the lease from entering the property.
  5. Right of Disposition: When Robert decides to sell his house, he is exercising his right of disposition.

The Importance of Understanding the Bundle of Rights

The bundle of rights is integral to property ownership, and understanding these rights can help owners maximize their use and control of their property. It’s also essential for potential buyers to grasp these rights, as they may inherit or acquire these rights when they purchase a property.

Moreover, certain transactions, like selling mineral rights or granting easements, can separate these rights from the property. Knowing what each ‘stick’ in the bundle represents ensures that owners fully comprehend what they’re giving up or retaining in such deals.

Conclusion

The ‘bundle of rights’ in real estate is a fundamental concept that represents the range of legal entitlements an owner has over their property. These five key rights – possession, control, enjoyment, exclusion, and disposition – each represent a ‘stick’ in the bundle, giving the owner full legal control over their property. Understanding these rights is crucial for anyone involved in the buying, selling, or management of real estate, including prospective real estate agents. Remember, knowledge is power – and in real estate, this knowledge can translate into a smoother transaction and more satisfying property ownership.

Real Estate Terminology: Fixtures

In the realm of real estate, there are several terms and concepts that buyers, sellers, and investors must be familiar with to navigate the market successfully. One such term is “fixture.” Understanding what constitutes a fixture is crucial, as it can have legal and financial implications during property transactions. 

Defining Fixtures in Real Estate

In the context of real estate, a fixture refers to an item or feature that was once movable but has now become permanently attached or affixed to a property. This attachment can be physical, functional, or legal. Fixtures are often included in the sale of a property unless otherwise specified.

Differentiating Between Fixtures and Personal Property

To better understand fixtures, it is essential to differentiate them from personal property. Personal property includes items that are not permanently attached to a property and can be easily removed without causing damage. Examples of personal property include furniture, appliances, and decor items.

On the other hand, fixtures are typically items that are affixed to the property and are considered part of it. They are generally regarded as part of the real estate and are not expected to be removed by the seller unless stated otherwise.

Determining Factors for Fixtures

Several factors help determine whether an item qualifies as a fixture. These factors are commonly referred to as the “IRMA” test, which stands for:

  1. Intent: The intention of the person who affixed the item to the property is crucial in determining whether it is a fixture. If the person intended for the item to be a permanent part of the property, it is likely to be considered a fixture.

Example: Installing built-in bookshelves or a chandelier indicates an intention for them to be part of the property.

  1. Relationship: The relationship between the item and the property is another factor to consider. If the item is customized or specifically designed for the property, it is more likely to be classified as a fixture.

Example: A custom-made kitchen island that is fitted to the exact dimensions of the space would be considered a fixture.

  1. Method of Attachment: The method of attachment refers to how the item is affixed to the property. Generally, if an item is permanently affixed, such as through nails, bolts, or cement, it is more likely to be deemed a fixture.

Example: Window blinds that are screwed into the wall would be considered fixtures.

  1. Adaptability: The adaptability of an item to the property is another factor to consider. If removing the item would cause damage or alter the property’s structure, it is more likely to be considered a fixture.

Example: Built-in kitchen appliances, such as a stove or dishwasher, would be classified as fixtures due to their adaptability to the property.

Examples of Fixtures in Real Estate

To provide a clearer understanding, let’s explore some common examples of fixtures in real estate:

  1. Built-in cabinetry and shelving.
  2. Ceiling fans and light fixtures.
  3. Plumbing fixtures, such as sinks, toilets, and bathtubs.
  4. HVAC systems and thermostats.
  5. Wall-mounted mirrors.
  6. Window blinds or shutters.
  7. Installed flooring, such as hardwood or tiles.
  8. Built-in appliances, like ovens, cooktops, and refrigerators.
  9. Security systems and doorbell cameras.
  10. In-ground swimming pools and attached hot tubs.

Implications for Agents in Real Estate Transactions

Real estate agents play a pivotal role in the intricate process of real estate transactions, including the negotiation and understanding of fixtures. Here’s how they participate:

  1. Buyer’s Perspective: A real estate agent acts as the buyer’s advocate, helping them navigate property inspections to identify and understand the importance of fixtures. They ensure that the buyer’s desired fixtures are explicitly listed in the purchase agreement to prevent future misunderstandings. Additionally, the agent will negotiate these terms with the seller or the seller’s agent, further safeguarding the buyer’s interests.
  2. Seller’s Perspective: For the seller, the agent assists in listing any fixtures they plan to remove before closing the sale. The agent ensures that these intentions are made known to potential buyers, thereby managing expectations and mitigating potential disputes. They are instrumental in clearly defining what constitutes a fixture and what does not, reducing ambiguity and potential conflicts.
  3. Financing and Appraisals: Real estate agents often coordinate with lenders and appraisers, making sure they have all necessary information about fixtures that could affect property valuations. Agents help highlight the value of particular fixtures and provide detailed reports to appraisers. They are also vital in explaining to both sellers and buyers how fixtures can impact the appraisal value of the property and subsequent financing options.

Overall, real estate agents ensure the smooth operation of property transactions, aiding both buyers and sellers in their fixture-related queries and negotiations, and interfacing with financial institutions and appraisers. Their knowledge and expertise contribute significantly to achieving satisfactory outcomes for all parties involved.

Conclusion

In real estate transactions, understanding fixtures is paramount for buyers, sellers, and investors. By differentiating fixtures from personal property and considering the IRMA factors, one can determine the status of an item within a property. Being aware of fixtures’ implications during real estate transactions ensures a smooth process and helps avoid misunderstandings, while having an experienced and professional agent will help protect your interests. Whether you’re buying or selling, a comprehensive understanding of fixtures will empower you to make informed decisions in the ever changing real estate market.

Understanding Steering in Real Estate: Definition, Examples, and Prevention

What Is Steering In Real Estate

If you are looking to buy a property, navigating the world of real estate can be overwhelming, especially when faced with the many specialized terms used in the industry. One such term that you may have come across is “steering.” This article will explore what steering means, why it is illegal, and what you can do if you encounter it.

What is “Steering” in Real Estate?

Steering is a practice in which a real estate agent influences a property buyer to purchase a particular property based on their unconscious prejudices. This practice is illegal because it goes against the Fair Housing Act, which prohibits discrimination based on race, color, religion, national origin, sex, disability, and familial status.

For example, if a real estate agent withholds information about properties that meet a potential buyer’s criteria based on their prejudices, they are engaging in steering. Similarly, if a real estate agent shows properties only in certain neighborhoods based on the buyer’s race or ethnicity, they are guilty of steering.

It’s worth noting that some steering can occur due to miscommunication or vagueness. For instance, if a buyer requests properties in a “safe” or “good” area without specifying their criteria, the real estate agent may interpret these terms based on their prejudices, which could lead to steering.

What Should a Buyer Do if They Notice Steering in Real Estate?

If you suspect that a real estate agent is steering you, it’s essential to report it. You should immediately drop the agent and find another agent who does not engage in discriminatory practices. You can also report the agent to their brokerage or other relevant authorities to prevent this behavior from continuing.

What Can Real Estate Agents Do to Avoid Steering in Real Estate?

Real estate agents can take several measures to avoid steering. Firstly, they must take the time to evaluate every choice when looking through properties. When a potential buyer tells them to look at “nice” or “good” properties, they must consider their potential unconscious biases.

Real estate agents must be objective and show potential buyers properties that meet their criteria, regardless of their identity characteristics. If they are unsure or believe their biases may influence their decisions, they should communicate directly with the buyer to clarify their criteria.

For instance, if the buyers say they want to live in a “nice” neighborhood, the real estate agent should ask them to elaborate and clarify what they mean. They can also ask the buyers about their price points and any specific features they want in the property.

Frequently Asked Questions

What is Steering vs. Redlining?
Steering and redlining are both illegal, discriminatory practices under fair housing laws. Steering refers to influencing property buyers based on unconscious prejudices, while redlining is denying loans or insurance based on a person’s race, ethnicity, or other protected characteristic.

What are the Penalties for Steering?
Steering in real estate can result in civil fines, lawsuits, criminal charges, revocation of a real estate license, and damage to an agent’s reputation. The penalties can be severe, so real estate agents must avoid discriminatory practices like steering.

What is Puffery in Real Estate?
Puffery is a legal term that refers to the act of exaggerating the value or qualities of a property to persuade someone to buy it. It is not considered a deceptive practice as long as the claims made are not false or misleading. For instance, a real estate agent may describe a property as “gorgeous” or “amazing,” even if it’s not objectively true.

How can I protect myself from steering?
The best way to protect yourself from steering is to educate yourself about fair housing laws and the signs of discrimination. If you feel that a real estate agent is engaging in steering, you should report them immediately and find another agent. When communicating with real estate agents, you can also research the neighborhoods you are interested in and be clear about your criteria.

Final Thoughts

Steering is a discriminatory practice that violates fair housing laws. It occurs when a real estate agent influences a property buyer based on their unconscious prejudices. As a buyer, you must educate yourself about the signs of discrimination and report any instances of steering. Real estate agents can avoid steering by being objective, communicating clearly with potential buyers, and taking the time to evaluate every choice when looking through properties. These and other critically-important topics are discussed in Chamberlin Real Estate School’s Real Estate Salesperson Pre-license Course.

What Are Appurtenances In Real Estate?

What Are Appurtenances In Real Estate

As you delve deeper into the world of real estate, you’ll come across numerous terms that are specific to this field. One term that you’ll encounter frequently is “appurtenances.” While the concept might initially seem overwhelming, it is easy to understand. Moreover, it plays an essential role in property ownership and truthful advertising. This blog post will discuss appurtenances, their definition, and how they relate to the broader real estate profession.

What is the Definition of an Appurtenance?

Appurtenances are additions to a property that have become permanent, such as improvements or rights integrated into the property. These additions are included in the property transaction and are often considered a bonus when buying a house. They are part of the larger entity and cannot be temporary items or personal equipment.

According to the exact definition of appurtenance, they are “property rights or items that are permanent and are passed along with the sale of the property.” By categorizing parts of the property as appurtenances, real estate transactions become much easier since these additions do not have to be separated from the property itself, which can lead to additional paperwork and expenses.

History of Appurtenances in Real Estate

Appurtenances became a defined term in the profession of real estate after the Cohen v. Whitcomb case in 1919. A heated debate occurred about whether a hot water heater, which the tenant installed, would still be owned by them or if it was now part of the property at large. Ultimately, the court decided that the hot water heater, classified as a “repair” and “improvement” to the property, now became a permanent part of the property itself and was technically owned by the landlord.

Can Appurtenances Be Removed?

To classify something as an appurtenance, it must be fixed to the building and not easily removable or replaceable. If removing it would cause significant damage to the property, it is considered an appurtenance. The permanence of the addition is crucial, which is why the term can sometimes be ambiguous.

For example, fences are considered appurtenances because they are fixed to the land, and removing them would damage the soil. In contrast, a baby gate placed by the stairs that can be easily moved is not an appurtenance. Similarly, an antenna attached to a chimney is an appurtenance, as removing it would cause damage.

Examples Of Appurtenances

Common examples of additions and repairs to a home that would be classified as appurtenances include Examples Of Appurtenances

  • Driveways
  • Fences
  • In-ground Swimming Pools
  • Garages
  • Barns
  • Sheds
  • Cabinets
  • Septic Tanks
  • Ceiling Fans
  • Furnaces


An easy way to determine if something is or is not an appurtenance is to recognize whether it can be removed from where it has been placed and if the current owner is able to take this attachment with them when they move to another property. Anything attached via a plug or not built with the intention of being permanent is not considered an appurtenance, such as an above-ground pool designed to be temporary and can be moved without causing damage to the property.

What Is An Appurtenant Easement?

An appurtenant easement refers to someone lending a part of their attached real property to another person for a specific purpose. It is an agreement made between two people to allow an outsider to traverse across parts of their property to get to another destination.

Example: A property owner with a driveway may allow someone else to walk or drive through it to reach another facility. This can sometimes be done without any exchange of money, or the landowner may require a one-time fee for granting access.

Appurtenant easements can include the right to use shared driveways or common areas like parks or swimming pools in a housing community. These easements are typically recorded in the property deed and can impact the property’s value.

Why Are Appurtenances Important in Real Estate?

Appurtenances are crucial in real estate transactions since they can affect the property’s value, ownership, and transfer. When buying or selling a property, it’s essential to consider all the appurtenances attached to it and understand its classification. Failure to recognize an appurtenance can result in legal disputes or additional expenses.

Moreover, appurtenances can also affect the use and enjoyment of the property. For example, suppose an appurtenant easement allows someone to cross through the property at specific times. In that case, it can limit the owner’s privacy and restrict the use of the property.

Summary

Appurtenances are permanent additions to a property, such as improvements or rights that become part of the larger property entity. They cannot be temporary items or personal equipment. Appurtenances can impact the property’s value, ownership, and transfer, making it essential to consider them during real estate transactions. Understanding appurtenances and their classification is crucial for real estate agents, buyers, and sellers to ensure smooth and successful transactions.

Learn More About Appurtenances

Appurtenances are just one of hundreds of terms which you’ll master as you study for your real estate license. The pre-license course from Chamberlin Real Estate School presents terms in a way that makes them easy to understand and remember. Any time you have questions, whether about terminology or fundamental concepts in real estate, you’ll have a live instructor available to help you as you prepare to become a Real Estate Agent. Start your journey today!