Real Estate Business Development

December 20, 2009by

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Real Estate Business Development concentrates on developing the real estate business and to ensure its growth with sustainability. Real estate business development would deal with the pillars of real estate business that require better coordination and cooperation from among the developers of real estate or real estate promoters, real estate brokers and middlemen, financiers for people who want to purchase real estate, and most importantly, the owners of the real property. Real estate business essentially deals with the ownership and use transfers of physical property. This physical property in question can either be a residential or commercial property. These are respectively called residential real estate and commercial real estate respectively. With the real estate boom experienced in many developing countries of the world under the impact of globalization, real estate business development has become a very profitable venture in many of these economies.

Real estate business development can take place in either small or large real estate businesses. The term real estate is essentially used to define land and everything that is permanently attached to the land. These permanent fixtures to the land will include buildings, fencing to the buildings and other fixtures such as plumbing, heating and lighting appliances. Real estate property is often called immovable property as opposed to personal or movable property where a person could retain the title to the property even in the event of transfer of the property. In the case of real estate however, transfer of the title takes place with the property. For technical purposes, the distinction between real estate and real property is sometimes used where the land and the fixtures to it are termed as real estate and the ownership rights over the real estate in question are called real property.

Real estate business works on the basic tool of appreciation of the value of the property over a certain period of time. Thus real estate business as an avenue of investment rests on the notion of accrual of capital gains. However, the value of the real estate is heavily dependent upon the condition of the surrounding area where the property is located. Business plan models can also be attributed to real estate business where the success or profits of the business depends on a network of independent brokers, franchisees, associate brokers and buying agencies. Real estate business development thus works on the expansion or better growth of the business and a constant effort to survive the cut-throat competition meted out by the competitors. Land improvements and buildings on the land held for business use in the production of income forms an integral asset of real estate business development. A real estate developer is essential in this context who makes some kinds of improvements to real property which can increase its value. These land or building developers may be individuals, but is more often a partnership, a limited liability company or corporation. The functions of the land developers include acquiring a natural or unimproved land and improve with basic infrastructural facilities such as roads and other utility connections. This process of real estate development will generally include a market research, a feasibility analysis of the study and the construction plans on the project. The cause for the increase in the value of property is due to the act that it provides a base for development or built improvements. Building developers have the task of acquiring raw land, improved land with the purpose of building housing projects. Business development can take place in these buildings are sold entirely or in part to others or they may also be retained as assets to produce cash flows by rents or other means. Building developers also sometimes subcontract some parts of the work to third parties known as small developers.

The other important functionary in real estate business development is the broker who mediates between the buyer and seller in the transaction process and helps them to ink the deal. In a fiduciary capacity, it is the duty of the agent or broker to protect the clients’ information, unless otherwise required by a court of law. Lastly, the owners of real property or those who have real estates in their possession are an important facet of developing the real estate business. With the development of private property ownership, real estate has emerged as a major area of business with the additional feature that each parcel of land has unique characteristics. This has brought in land appraisers and accountants under the fold of real estate business development. Land appraisers, land accountants and surveyors are engaged in assessing the value of the land and determining its price in case of transfer of the property. Real estate business development will also include real estate financiers such as individuals, banks and Real Estate Investment Trusts (REIT’s) under its ambit who provide finances in the form of equities and loans to people who want to purchase and deal in real estate properties. It is to be noted in this context that government regulation is needed in putting a cap on the maximum value of real estate to prevent unfair practices arising from mortgage practices on real estate.

The key pillars of real estate business development are:-

  • Accountants
  • Appraisers
  • Counselors
  • Government Regulators
  • Mortgage Brokers
  • Mortgage Lenders
  • Surveyors
  • Title Companies
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