Types of Real Estate Practice - What Consumers Need to Know
In Alberta, real estate professionals can have a licence that allows them to work in a type – or multiple types – of real estate practice.
The four practice areas are:
- residential real estate
- rural real estate
- commercial real estate
- property management.
It may seem obvious what type of real estate professional you need (for example, if you’re selling a single detached house you need a residential real estate professional), but sometimes the line is blurry. For example, if you have an acreage property located outside of a city, is it residential or rural? Here is detailed information to help you figure out what type of real estate professional you need.
Click to expand for more information.
+ Residential Real Estate
Real estate is residential, when:
- the building and the land are intended for residential purposes
- the building has four units or less intended for residential purposes
- the land intended to be the site of a residential building or buildings will eventually have four units or less
They can represent buyers and sellers of residential real estate, including
- single-family homes
- residential acreages (country residential) not intended for farming
- condominiums (single units only, not entire condo buildings with more than four units)
- a cabin at the lake used for recreational purposes
+ Rural Real Estate (Agri-Business)
Rural real estate refers to:
- property outside a city, town, etc. that has farming as its primary purpose
They can represent buyers and sellers of rural real estate. Typically, rural properties that are intended for farming have a designated land use that reflects that. The rural definition does not include “rural residential” properties. Residential real estate includes rural residential properties, which are also known as country residential properties, such as acreages. These properties have a residential dwelling or are intended for a residential dwelling, and their primary purpose is not farming. Individuals whose licence only includes rural real estate cannot represent the buyers and sellers of rural residential or country residential.
+ Property Management
Property management is:
- leasing, negotiating, approving or offering to lease real estate
- collecting or offering or attempting to collect money payable for the use of real estate
- holding money received in connection with the rental of real estate
- advertising, negotiating or any other act, directly or indirectly for the purpose of furthering the above activity
Property management professionals can work with landlords (property owners) and/or tenants (potential tenants) in the leasing of real estate. A licence to provide property management services allows an individual to do so for all types of properties: commercial, residential and rural real estate.
+ Commercial Real Estate
Commercial real estate means property intended to generate income. It includes property used for:
- multifamily residential property comprised of more than four units
They can assist in the purchase, sale, or lease of office buildings or space, industrial sites and retail.
These examples do not cover every possible situation or scenario.
- Side-by-side duplex: a residential real estate professional can assist the buyer or seller of a side-by-side duplex because the property is residential, its use is residential, and it has only two premises.
- 10-unit apartment building: A residential-only real estate professional would not be able to assist the buyer or seller of such a property. The real estate professional requires a licence to trade in commercial real estate.
- Representing the buyer of a four-plex: An individual with a licence to trade in residential real estate could assist the buyer in the purchase of a four-plex as there are only four premises.
- A developer wants to hire a residential real estate professional to sell 75 individual premises in a high-rise condominium building. A residential real estate associate can represent the developer for these sales. The developer is selling one unit at a time; the developer is not selling the building as a whole (if he was, he would require the services of a commercial real estate professional). If one buyer wants to purchase multiple units, each purchase would be separate and the buyer could still be represented by a residential real estate professional.
- A buyer wants to buy an acreage with 5-10 acres with a single-family residence. The buyer will use this as their family’s principal residence. A residential real estate professional could assist this buyer in their search for a single-family home on an acreage.
- A unique development in Calgary contains office/residential condominiums. In each unit, the owner resides, but the land use policy allows the individual to have a home business in the condominium. A residential real estate professional could assist a buyer or seller of this property. Its primary use is residential, even with the addition of office space, and it’s a single premises.
- A developer is selling lots at a lakeside resort community. A buyer wants to purchase one of these lots with the assistance of a real estate professional. The buyer plans to build a recreational property in which he will reside half of the year. He may consider renting out the property for the other six months of the year. A residential real estate professional could represent the buyer in this deal. The real estate’s use is as a site for residential purposes.
- A residential property owner enters into a written service agreement with a residential real estate professional to sell the property. The owner is transferred out of town and the property hasn’t sold yet. He asks his residential real estate professional to find a tenant. The residential real estate professional can lease the property on the owner’s behalf, but can’t manage the property unless he is authorized in property management and his brokerage allows property management activities.
- A seller operates a six-bedroom bed and breakfast on an acreage outside of the city; the primary purpose of the property is not farming. The property does generate income. A commercial practitioner could represent this seller. A rural real estate practitioner could not represent this seller; the primary purpose is not farming.
- A residential property owner enters into a written service agreement with a residential real estate professional to sell the property. The owner moves out of town prior to the home selling. He asks his residential real estate professional to find a tenant. The residential real estate professional can lease the property on the owner’s behalf, but can’t manage the property unless he is authorized in property management and his brokerage allows property management activities.
- Leasing under contract: an industry professional has a property (strip mall) under contract, as a property management brokerage, and they advertise for clients to lease a bay in the strip mall. A potential tenant says the available bay isn’t quite what he wants and he says he saw one across the street in a different building. Unless the professional has a property management contract with the owner of the property across the street, they can’t help the potential tenant. The potential tenant needs a commercial real estate professional. Professionals can only do the leasing for the properties under which they have a property management contract.
- Licensed to trade in all areas: Some individuals are licensed to trade in all areas of real estate practice, including property management, but their brokerage does not allow property management activities. In those cases, those individuals cannot provide property management activities because doing so would be trading in real estate outside of the brokerage with which they are registered.
- The owner of a small convenience store lives in a residential premises above the store. The owner has decided to sell the entire building, including the store premises and the residential premises. The intended use of the property is to remain as a commercial enterprise on the first floor with a residential premises on the second floor. A commercial real estate professional can represent the seller in this transaction; a residential real estate professional cannot.