Chapter 1
Georgia Real Estate
An Introduction to the Profession
Eighth Edition
Chapter 1
Introduction to Real Estate
Key Terms
• broker
• independent
contractor
• license reciprocity
• license revocation
• license suspension
• licensee
•
•
•
•
•
•
principal broker
real estate commission
real estate salesperson
realtist
REALTOR®
sales associate
© 2015 OnCourse Learning
Overview
Real estate is a unique subject.
No two situations are ever exactly alike.
Overview
Experience has a high correlation with success
in this business.
This course combines explanations of the
basic principles of real estate along with why
things are done and how these principles apply
to everyday activities.
How to Use The Textbook
• Key terms are listed at the beginning of each
chapter
• Additional terms are set in italics throughout
the text
• Review questions at the end of each chapter
test you on your comprehension
• Answers are given in Appendix D in the back
of the book
© 2015 OnCourse Learning
Career Opportunities
Residential Brokerage requires a broad
knowledge of the community and its
neighborhoods; an understanding of real
estate principles, law and practice; and an
ability to work will with people
© 2015 OnCourse Learning
Career Opportunities
Commercial Brokers specialize in incomeproducing properties such as apartment and
office buildings, retail stores and warehouses.
Industrial Brokers specialize in finding suitable
land and buildings for industrial concerns.
© 2015 OnCourse Learning
Career Opportunities
Farm Brokers handle small farms along with
large tracts of land owned by agribusiness
corporations.
College training in agriculture is an advantage
and on-the-job training is a must.
© 2015 OnCourse Learning
Career Opportunities
Property Managers supervise every aspect of a
property’s operations to produce the highest
possible financial return over the longest
period of time.
A property manager’s tasks include renting,
tenant relations, repairs and maintenance,
accounting and advertising.
© 2015 OnCourse Learning
Career Opportunities
A Real Estate Appraiser gathers and evaluates
all available facts affecting a property’s value.
Appraisers in Georgia must be licensed.
© 2015 OnCourse Learning
Career Opportunities
Developers buy land, build homes and sell
them to homeowners and investors. This can
be done on a small scale or on a large scale.
Urban Planners work with local governments
and civic groups to anticipate future growth
and land-use changes.
© 2015 OnCourse Learning
Career Opportunities
Mortgage Financing specialists can work
independently or as an employee:
• Mortgage Brokers work independently. They
receive a fee from the borrower for locating a
lender.
• Loan Officers work as an employee of a
lending institution.
© 2015 OnCourse Learning
Career Opportunities
Consulting involves giving others advice about
real estate for a fee.
A consultant must have a broad knowledge
about real estate.
© 2015 OnCourse Learning
Career Opportunities
Investment Opportunities in real estate
include:
• Apartment buildings
• Rental homes
• Underpriced properties
• Small-scale developer
© 2015 OnCourse Learning
License Laws & Professional Affiliation
License Requirements
Property owners who deal only with their own
property are not required to hold a real estate
license.
© 2015 OnCourse Learning
License Laws & Professional Affiliation
A Real Estate License is required for
any person who, for compensation or the
promise of compensation, lists or offers to
lists, sells or offers to sell, buys or offers to
buy, negotiates or offers to negotiate, either
directly or indirectly for the purpose of bringing
about a sale, purchase or option to purchase,
exchange, auction, lease or rental of real
estate.
© 2015 OnCourse Learning
License Laws & Professional Affiliation
Rationale for Licensing
The public has a vested interest in seeing that
real estate salespersons and brokers have the
qualifications of honesty, truthfulness, a good
reputation and real estate knowledge before
they are allowed to negotiate real estate
transactions on behalf of others.
© 2015 OnCourse Learning
License Laws & Professional Affiliation
Rationale for Licensing
All 50 states and the District of Columbia
require that people who offer their services as
real estate agents be licensed.
© 2015 OnCourse Learning
License Laws & Professional Affiliation
Loyalty, Honesty and Truthfulness
The Georgia Real Estate Commission (GREC)
has the power to refuse to issue a license to
someone with a past history of dishonesty and
untruthfulness.
GREC can also suspend or revoke a license
once it has been issued.
© 2015 OnCourse Learning
License Laws & Professional Affiliation
Loyalty, Honesty and Truthfulness
As part of the application process, potential
licensees must provide a criminal background
check that is no more than 60 days old.
© 2015 OnCourse Learning
License Laws & Professional Affiliation
People Required to Be Licensed:
• Brokers
• Salespeople
• Appraisers
• Property Managers
• Community Association Managers
© 2015 OnCourse Learning
License Laws & Professional Affiliation
People Exempt from Being Licensed
• Property Owners
• Attorneys acting for a client
• Trustees, Receivers, Administrators and
Executors acting under a will or trust
• Government employees dealing in real
estate
© 2015 OnCourse Learning
Real Estate Broker
A real estate broker is licensed to act
independently in conducting a real estate
brokerage business.
A broker can be an actual person or a
business firm.
If the broker is a firm, the person in charge
must be a broker.
© 2015 OnCourse Learning
Real Estate Broker
A broker receives a fee, usually a commission,
based on the selling price or lease rent.
The broker may represent the buyer or the
seller, or both at the same time with full
disclosure.
© 2015 OnCourse Learning
Real Estate Broker
A broker may hire other brokers or
salespersons for the purpose of bringing about
real estate transactions.
© 2015 OnCourse Learning
Salesperson
A real estate salesperson works for a real
estate broker to list and negotiate the sale,
lease or rental of real property for others in
exchange for compensation, under the direct
supervision of an employing broker.
A salesperson cannot operate independently.
They must be employed by a broker.
© 2015 OnCourse Learning
Salesperson
When a salesperson takes a listing, they do so
in the name of the broker.
The salesperson is empowered to act on
behalf of their broker through an independent
agreement with the broker to sign on behalf of
the firm.
© 2015 OnCourse Learning
Sales Associate
A sales associate refers to anyone with a real
estate license who is employed by a broker.
Someone who holds a broker’s license can
work for another broker. They are licensed as
an associate broker.
© 2015 OnCourse Learning
Qualifications for Licensing
Salesperson Examination
• Minimum age is 18 years old
• Must complete a 75-hour course
• The Georgia Salesperson exam consists of
152 multiple-choice questions
• A passing grade of 75% or higher is required
© 2015 OnCourse Learning
Qualifications for Licensing
Broker Examination
• Minimum age is 21 years old
• Must be actively licensed for 3 of the last 5
years
• Must complete a 60-hour course
• 10 graded computer simulation exercises
© 2015 OnCourse Learning
Qualifications for Licensing
Continuing Education
Beginning in July 2015, the continuing
education requirement will be 36 hours to
renew a license.
Georgia has a four-year license period.
© 2015 OnCourse Learning
Licensing Procedure
Applied Measurement Professionals (AMP) is
the testing provider for GREC:
www.goamp.com
Exam cost is $115
Exam locations: Lilburn, Marietta, Savannah
and Macon
© 2015 OnCourse Learning
Licensing Procedure
To become licensed, you will need:
• $170 certified check or credit card
• GCIC Background Report
• Notarized Lawful Presence Verification
Document
• Sponsoring Broker Form
© 2015 OnCourse Learning
Licensing Procedure
Licenses must be renewed every 4 years to
remain active. The license will lapse if it is not
renewed before it expires.
Licenses can be put on inactive status. The
license must still be renewed every 4 years,
but continuing education is not required until
the license is reactivated.
© 2015 OnCourse Learning
Licensing Procedure
Many states will issue a nonresident license to
out-of-state brokers. This is especially helpful
when a broker is located near a state border.
Some states will give credit for the national
portion of the license exam already taken,
requiring only the state portion of the exam.
© 2015 OnCourse Learning
Licensing Procedure
License Reciprocity is when one state honor’s
another state’s license.
Georgia has differing agreements of reciprocity
with other states.
Contact the real estate department of the
state you are interested in for specific
information.
© 2015 OnCourse Learning
Licensing Procedure
When brokers operate outside of their home
state, they may be required to file a notice of
consent with the secretary of state. This
enables the secretary of state to receive legal
summonses on behalf of the nonresident
broker.
© 2015 OnCourse Learning
Licensing the Business Firm
A real estate broker can operate as a sole
proprietorship under either the broker’s own
name or a fictitious name.
A broker can also operate in partnership with
other brokers or as a corporation.
© 2015 OnCourse Learning
Licensing the Business Firm
Because a corporation is an artificial being,
there must be a qualifying broker who accepts
responsibility for the management of the firm.
© 2015 OnCourse Learning
Licensing the Business Firm
If the broker has multiple offices, it is not
required that those offices have their own
qualifying broker. It is required that the
company provide adequate supervision.
Each office will typically have a managing
broker.
© 2015 OnCourse Learning
Real Estate Regulation
© 2015 OnCourse Learning
Real Estate Regulation
The state legislature enacts laws addressing
the licensing and regulation of real estate
brokers and salespersons.
The legislature also establishes the real estate
commission.
© 2015 OnCourse Learning
Real Estate Regulation
The real estate commission deals primarily
with adopting rules and regulations to
implement the license law established by the
legislature.
In Georgia, the real estate commission has six
members.
© 2015 OnCourse Learning
Real Estate Regulation
Five of the commission members are
licensees, the sixth member is a non-licensed
member of the general public.
Members are appointed by the Governor and
confirmed by the Senate.
The commission meets monthly.
© 2015 OnCourse Learning
Real Estate Regulation
The commission hires a commissioner to
oversee real estate regulation.
The commissioner hires and supervises staff.
Neither the commission nor any commission
employee hold an active real estate license.
© 2015 OnCourse Learning
Real Estate Regulation
Real estate commission staff collect fees,
issue licenses, investigate alleged
malpractices and audit broker trust fund
accounts.
© 2015 OnCourse Learning
License Suspension and Revocation
Without a real estate license, it is unlawful for
a person to engage in real estate activities for
the purpose of earning a commission or fee.
Unless an agent has a valid license, a court
will not uphold an agent’s claim for a
commission from a client.
© 2015 OnCourse Learning
License Suspension and Revocation
Reasons for license suspension
and revocation include:
• violation of the state’s real
estate act
• misrepresentation
• undisclosed dual agency
• commingling
• acting as an undisclosed
principal
© 2015 OnCourse Learning
License Suspension and Revocation
Licenses can also be revoked or suspended for:
• false advertising
• obtaining a license by fraud
• failure to account for a client’s funds
• practicing law without a license
• paying commission to unlicensed persons
• conviction of a felony or certain
misdemeanors
© 2015 OnCourse Learning
License Suspension and Revocation
When the commission receives a complaint
from someone regarding a licensee, the staff
will conduct an investigation.
If the commission decides to suspend or
revoke the respondent’s license, the
respondent has the right of appeal to the
courts.
© 2015 OnCourse Learning
Affiliating with a Broker
A salesperson must have a broker to work for
before the actual license will be issued.
If you are new to the industry, training and
education will be at the top of your list when
looking for a broker.
© 2015 OnCourse Learning
Affiliating with a Broker
Compensation for salespeople is usually a
percentage of the commission they earn for
the broker.
How much each receives is open to
negotiation between the broker and each
salesperson.
© 2015 OnCourse Learning
Affiliating with a Broker
Hold interviews with several
brokers.
You are interviewing them
as much as they are
interviewing you.
© 2015 OnCourse Learning
Affiliating with a Broker
An Employment Contract must be in writing
and must stipulate how the agent will be
compensated while they are with the broker
and how they will be compensated when they
leave the broker on transactions that have
been started but not yet completed.
A written agreement is required by Georgia law.
© 2015 OnCourse Learning
Independent Contractor Status
Sales associates act like an
independent contractor
because the associate it
typically paid only if the
associate brings about a
sale that produces a
commission.
© 2015 OnCourse Learning
Professional Real Estate Associations
REALTOR® is a registered
trade name that belongs to
the National Association of
REALTORS® (NAR).
It is reserved for the
exclusive use of members
of the National Association
of REALTORS®
© 2015 OnCourse Learning
Professional Real Estate Associations
One of the most important features of the
National Association of REALTORS® is its Code
of Ethics.
To be recognized as a REALTOR®, one must
observe the ethical standards by which the
industry operates.
© 2015 OnCourse Learning
Professional Real Estate Associations
The National Association of Real Estate
Brokers is a national trade association
representing minority real estate
professionals.
Members use the trade name Realtist.
© 2015 OnCourse Learning
Review State Laws required to
obtain a real estate license.
© 2015 OnCourse Learning