GREC REnews, Vol. 8, Issue 5 (May 2012)

May 2012 Volume 8 Issue 5

GGRREECCRREENNeewwss Monthly Newsletter
of the Georgia Real Estate Commission

2012 Calendar
GREC Brokerage Course &
HU
Trust Accounts Class Dates:
UH
May 23 &24, 2012 Valdosta Board www.valdostaboardofreal tors.com
June 26 & 27, 2012 Dekalb Association www.dekalbrealtors.com
July 11 & 12, 2012 Dublin Board www.dublingarealestat e.com
Common Violations Class
HU
Dates: U
June 5, 2012 GAMLS Training Morrow 770-493-9000
June 12, 2012 Greater Augusta Board 706-736-0429
June 19, 2012 Golden Isle Assoc. 912-264-2915
June 21, 2012 Greater Rome Board 706-295-1727

Commercial Review

This Issue: Commercial Review Licensees in the Know Focus on Terminology

P.1-2 P.1 P.2

In the Field... Using Your Knowledge
Consider the following scenario to refresh your basic analysis tools. Specific details have been minimized to simplify your review. (The explanations and definitions for the terms in bold green are accessible in a PDF document by clicking this link.)
A seller-client asked a real estate licensee for an opinion as to the best method to maximize the value of the seller's property. The seller was considering leasing out the property or selling it.
The seller's property is already developed with a 4,800 square foot, 2-story building (currently vacant) with sewer, good road access, and extra land. (See drawing on page 2.)
In the initial discussion, the licensee must explain to the seller that he is not an appraiser or a builder, and his ideas represent the licensee's professional opinion and recommendations. The first thing the licensee needs to do is visit the property, and in doing so he collects the following additional information.
It is located in a good area transitioning from single-family residential to mixed use, and becoming a livable community. The design of the existing building is well suited for a retail shop below, while maintaining the residential unit upstairs.
Research shows that several building permits have been issued in the immediate area for both new and remodeled retail and office uses, including 2 story lofts.
The building on the property is in good condition and could be used as residential or even retail. There appears to be extra land for parking.
Continued on page 2...

Real Estate Licensees in the Know

Click here to see GREC Disciplinary Sanctions
Georgia Real Estate Commission Suite 1000 International Tower 229 Peachtree Street NE Atlanta, GA 30303-1605 Phone 404-656-3916
Clipart from MicrosoftTM Office

A real A real estate licensee is expected to be familiar with issues that affect * the real estate market. Transportation is an issue that impacts,
residential, commercial, office, retail, and all facets of the real estate industry. A current example of such an issue that licensees should be aware is the proposed Regional Transportation Referendum involving the implementation of a penny sales tax to support a mixture of road and transit projects. A vote will be held on July 31, 2012 to determine whether or not the penny sales tax for Regional Transportation Referendum will be enacted. In 2010, the Transportation Investment Act created the ability for projects all over Georgia to be decided by residents.
A licensee engaged to relocate an office tenant client, or a licensee showing houses to buyers, or any other engagement is considered a professional in real estate and expected to be knowledgeable and informed about projects affecting the region. To be better informed, research the upcoming proposal. *http://www.grta.org/tran_del.html
http://www.atlantaregionalroundtable.com/documents/RTR_factsheetcombined_v02.pdf
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Georgia Real Estate Commission Suite 1000 International Tower 229 Peachtree Street NE Atlanta, GA 30303-1605 Phone 404-656-3916
Clipart from MicrosoftTM Office

GREC RENews May 2012, Volume 8 Issue 5

In the Field... Use your Knowledge

...continued from page 1

3. If the licensee is to be paid a

Noting comparable properties and research of the zoning codes, the licensee believes the property is compatible for street-level retail or office and residential on a second level.
The licensee presents 2 options to the seller regarding the marketing of the

commission for negotiating the leases on the transaction, how could his/her commission is paid? Check all the answers that apply:
o As a flat fee o A percentage of the monthly or total
rental

property for its HABU. (What's HABU? click o A percentage of the total rental for the

here)

lease term and/or a flat fee

1. Market the property for its value if sold o The first month's rental amount

as land for redevelopment.

o Any clearly defined method that is

2. Market the building for lease as street-

agreeable between the parties and that

level retail and residential on the

can be calculated to a definite amount.

second floor. (The licensee will include

a discussion of the pros and cons of

being a landlord).

4. What is the

The licensee's research of rental rates acreage of the

200'

indicates the following:

property?

Rental rates for Retail space are o (160 x 200)/44,000

running a bit low at $11 per square foot o .74 acre

Net.

o (160 x 200)/43,560

Rental for residential properties of

160'

comparable size and features runs

$1,200 per month.

Using only the data provided, complete the missing information for his analysis.

5. If recent sales indicate land values of $25 per square foot, what is a reasonable listing price for the

1. What would be the monthly rental for property?

the retail portion of the subject o 32,000 x $25

property? Check all the answers that o $800,000

apply:

o $1,000,000

o $26,400 o $2,200 o (2,400 x $11)/12

6. Based on the values of the above analysis, what use or disposition would the licensee likely recommend

2. Based on an overall Cap rate of 6.5% what is the indicated value of the rental property?

for marketing the subject property to obtain the highest value? What discussions should be included in this recommendation?

(The Explanations for the Commercial Review and the definitions for the terms in bold green are accessible in a PDF document by clicking this link.)

Focus on Terminology: "GDOT and GRTA"
GRTA is the Georgia Regional Transportation Authority. GRTA's mission is "to improve Georgia's mobility, air quality and land use practices." GRTA manages and implements transit services through partnership with many entities including local transit authorities, cities, counties, and private operators.http://www.grta.org/news_section/news_home.htm GADOT is the Georgia Department of Transportation http://www.dot.state.ga.us GADOT responsibilities include planning, constructing, maintaining, and improving states road and bridges, waterways, rail transit. providing planning and financial support for mass transit and air safety planning and airports. Resources include a list of active projects, tools that map out road projects, traffic reports, and count data.
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