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What is the Real Estate Act?

Video by one of the best Real Estate Tutors in Alberta, Raman Gakhal explaining the laws of Alberta Real Estate Act.

The Real Estate Act of Alberta is the legislation governing residential real estate, commercial real estate, property management, condominium management, and mortgage brokerage licensees in Alberta. RECA administers the Act on behalf of the provincial government. It establishes the framework for regulating 3 different professions: Real Estate, Mortgage Brokerage and Real Estate Appraisers.

The key points to remember about The Real Estate Act are:

  • It is a statute enacted by the provincial legislature.
  • It is the law, and it is the responsibility of the Minister of Service Alberta, and it can only be edited by the legislative process, so any changes or amendments that need to be made to The Real Estate Act must go through the legislative process.

The Real Estate Act consists of 4 different components – The Act, The Rules, The Bylaws and The Regulations.

The Act

The Act is divided into 6 different parts and each part focuses on a specific aspect of the legislation. The different parts are RECA which establishes RECA, the Real Estate Council of Alberta and defines its purpose and powers. Each body governs its own category and lays down guidelines for its specific legislation within its power. Some of them are as follows:

  • The Regulation of Business of an Industry Member deals with the authorizations to trade in real estate, conduct proceedings, which deals with investigations, hearings and appeals regarding the conduct of industry members.
  • The Real Estate Assurance Fund is designed to protect the public from fraud or breach of trust by real estate or mortgage brokerage industry members.
  • The Alberta Real Estate Foundation which is established to promote the education of real estate and mortgage brokerage professionals.
  • General Guidelines provide generic laws and regulate guidelines for all categories.

The Rules

Rules are standards of practice for industry professionals. These deal with things like authorizations, licenses and registrations, standards of conduct and practices of the members, accounting, book-keeping and reporting requirements, errors and omissions insurance which is done through RECA and the fees schedules for various things like licenses, registration and so forth. Since the rules are administrative in nature, these can be amended by the Council.

The Bylaws

Bylaws are a set of administrative guidelines that are adopted by the Council. These specify how RECA conducts and operates its business. These relate to Council members, Council proceedings, and Council administration. They deal with administrative penalties, hearings and appeal panels, and also the Real Estate Assurance Fund. Since the Bylaws are administrative in nature, they can be amended by the Council.

Now, who can make changes or amendments? So, the first one is, to Real Estate Act or The Regulations. Both must deal with the law. Therefore, only the Legislature can make changes to these and not RECA. Whereas the Rules and Bylaws are administrative in nature, therefore these can be amended by RECA.

The Regulations

The Regulations are amendments or interpretations to sections of the Act. There are 2 different types of regulations, ministerial regulations, and exemption regulations.

Ministerial Regulations set the policy for organization and administration of Alberta Real Estate Foundation and Real Estate Assurance Fund, whereas Exemption Regulations deal with granting exemptions to certain people from the Act or certain bodies from the Act, for example, banks, lawyers, et cetera.

The regulations are part of the law, so they are made by Minister responsible for the Act or the Lieutenant Governor in Council.

QUESTION SAMPLES

So, let us move on to some sample questions now, and take a look at what type of questions can we expect on the exam related to this topic.

Example 1:

Which of the following has the authority to create Bylaws governing the Council?

A. The Council
B. Government of Alberta
C. Alberta Real Estate Association
D. All the above

The answer is A, only the Council has the authority to create Bylaws governing the Council.

 

Example 2:

The Regulations as established by the Cabinet and Lieutenant Governor in Council cover:

A. The administration of the Alberta Real Estate Association and the Real Estate Assurance Fund

B. The administration of the Alberta Real Estate Foundation and the Real Estate Assurance Fund

C. The administration of the Alberta Real Estate Foundation and the Alberta Real Estate Association

D. None of the above

The correct answer is B. The Regulations cover the administration of the Alberta Real Estate Foundation and Real Estate Assurance Fund.

 

Example 3:

Which of the following may RECA amend?

A. The Rules
B. The Regulations
C. The Act
D. All of the above

The correct answer is A. RECA can only amend the Rules. The Regulations and The Act, they are part of the law, so RECA cannot make any changes to the Real Estate Act or the Regulations.

These are the basics that are required to know about the Alberta Real Estate Act when you are starting up with Real Estate studies.

Wondering about other Real Estate Topics? Let’s see if you know about the Different Types of Classes for Real Estate Licensing in Alberta.

Learn with Alberta Real Estate School and pass your Alberta Real Estate Exam in the First Attempt!

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Sellers’ Real Estate Market

Sample of a video tutorial by the Alberta Real Estate School Instructor, Raman Gakhal to explain the various characteristics of The Seller's Real Estate Market in Alberta.

The Real Estate Market is a cyclical business, and it will change over time, so no two markets will be the same. As real estate professionals, we really need to understand what the current market conditions are so that we can advise and serve our clients in the best possible way.

Real estate is arguably one of the oldest and most diverse industries anywhere in the world. It requires efforts to fully understand the diverse areas of a Real Estate Market and its various types. To begin with, lets see the characters involved in the real estate markets and the division of market categories based on the characters involved.

There are 2 main variables involved that determine the flow of the real estate market in a particular direction – Buyers and Sellers. Based on their influence, the real estate market can change its course accordingly.

The market can thus be divided into 3 categories:

Balanced market, Buyers’ market, Sellers’ market

Today, we will look at what is a sellers’ market, and we will dive deeper into what are the different characteristics of a Sellers’ Market.

Seller’s Real Estate Market

A Sellers’ Real Estate Market is when the demand for real estate properties is higher than the supply of properties.

A Sellers’ Market has its own set of characteristics which are given s follows:

Properties of a Sellers’ Real Estate Market

  1. Under a Sellers’ Market, the first thing we’ll find that the economy is booming. In this type of economy, everybody is feeling very optimistic, people have jobs, they have money to spend, and overall, the economy is doing well.
  2. The supply of properties that are available for sale is less than the demand for properties. So, there are fewer properties for sale than the demand for these properties.
  3. Supply is less than demand and therefore, there will be more buyers than there are sellers because the economy is doing well.
  4. We also find that buyers will have limited time to make a purchasing decision because the number of properties that are available for sale is less than the number of buyers that are looking to buy properties.
  5. Therefore, we get into this multiple bid situation as well, and buyers will not have as much time to make that purchasing decision because the properties will get sold quickly or we may get into this multiple bid situation.
  6. Property prices will be rising because there are a lot of people, a lot of buyers competing for the properties that are available for sale.
  7. The inventory of properties that are available for sale will be small.
  8. Also, we’ll find that during the Sellers’ Market, properties will sell quickly because there are more buyers that are looking for properties.

SAMPLE QUESTIONS FOR SELLER’S MARKET

Example 1:

A recent newspaper headline states, local real estate board says it’s now a sellers’ market. What does this mean?

I. property prices are going up
II. property prices are going down
III. properties take longer to sell
IV. properties sell quickly.

The different options are:

  1. statements I and IV
  2. statements II and III
  3. statements I and III
  4. statements II and IV

In this case, we have more than one statement that will be correct for a Sellers’ Market.

The correct answer is A. Statements I and IV are correct. That means property prices will go up during this time as well, the properties sell quickly.

Example 2:

What market is characterized by rising property prices, expansion in the local economy, and three, higher demand and lower supply of properties?

  1. Buyers’ market
  2. Balanced market
  3. Sellers’ market
  4. All of the above

The correct answer is B. During sellers’ market, we will see that property prices are going up because there is more competition for buyers, the economy will be expanding, as well as there is a higher demand for properties and lower supply of properties.

These are the sample questions with explanation to thoroughly understand the concept of Seller’s Real Estate Market.

Do you know about the subsequent of a Seller’s Real Estate Market? – Buyer’s Real Estate Market??

Strengthen your Real Estate Terminology by updating your Real Estate Glossary Knowledge from Alberta Real Estate School.

If you wish to understand more topics related to the Real Estate Industry with personal tutoring sessions and condensed notes, call us directly at 587.936.7779.

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Real Estate Inducement vs Incentive

Alberta Real Estate School Instructor, Raman Gakhal explaining the true concept of Real Estate Inducement vs Incentive through a Video Tutorial.

What are Inducements and Incentives in the Real Estate Market? How do we simplify the two and make them easier to understand for the growing Real Estate Agents? Well, here’s how.

To start with the concept, the Real Estate Market is no different than the ordinary marketplace. It includes buying and selling; customers, dealers, and manufacturers; It is just like a regular product on sale, unlike the fact that the product valuation is far more superior and inconsistent than the regular consumer goods in the market.

A sale can include incentives, offers and other motivational inducements that helps sellers persuade buyers to make a sale. Real Estate Agents can also offer some appropriate incentive techniques to gain a customer and increase their sale volume. Although, there are some malpractices that are prohibited by the law enforcement bodies which should be kept in mind. But, rebate offerings within the permit can be practiced without any hesitation.

Inducements and Incentives serve the purpose of rebates offered by the sellers to the buyers in the Real Estate Markets. They fall in the same category, but there is still a major difference in the core of the concepts. Some industry professionals confuse “incentives” and “inducements”. As a real estate agent, you should know what Real Estate Inducement and Real Estate Incentive is and the difference between the two.  We will also look at some of the sample questions on the same to understand the concepts better. Let’s dive in.

Real Estate Incentive

An incentive is anything that is advertised or offered by the brokerage for attracting new business. So, this could be a brokerage is looking for new business from previous clients or they could be looking for new clients or new listings.

Some examples of incentives are gifts itself. It could be a physical gift. It could be a gift card to Home Depot, Lowes, or anything like that. It could also be a Visa gift card. Or a chance to win something, like entering a draw, or winning a vacation, etc.

Key Points to Remember:

  1. Incentives must be brokerage wide, that means incentives can only be offered by the brokerage, not by the individual real estate agents within that brokerage.
  2. Real estate professionals cannot offer their own incentives to attract business to them personally, they must be offered through the brokerage and all real estate professionals belonging to that brokerage must offer the incentive to their clients or potential clients.
  3. It is not a one-off thing offered by individual real estate professionals. The main reason behind this rule is that members of the public should receive the same information regarding the incentives that are being offered by the brokerage regardless of who they choose to work with so that everything is being communicated the same to everyone.

So, let us look at some examples of appropriate incentives.

Example 1

New Home Realty advertises that “Any seller who lists their property with New Home Realty within the next 90 days will be entered into a draw to win a trip for two to Hawaii.” 

In this case, it is a brokerage that is offering the incentive and they’re offering a draw for a vacation. Thus, it is a completely appropriate incentive.

Example 2

XYZ Realty advertises that “Anyone who lists their property for sale with XYZ Realty within the next 60 days will receive a $500 Home Depot gift certificate.”  

In this example, it is a gift certificate. It is offered through the brokerage, so a completely appropriate example of incentive.

Now let us look at some examples that are not appropriate.

Example 1

John Smith, who’s a real estate professional advertises, “Hire me to sell your house and you will receive a $500 gift card for Home Depot.”  So in this case, it’s the same incentive, however, it is offered by an individual real estate agent as opposed to the brokerage, so that’s why this is not an appropriate incentive.

Example 2

Susan Jones advertises, “Let me help you find your next home and I will pay your home inspection fees.”  In this case, paying the home inspection fees could be used as an incentive, however, it is not being offered through the brokerage, it is offered by Susan Jones who is an individual real estate agent, so that’s why this is not an appropriate incentive.

Real Estate Inducement 

An inducement is anything a brokerage offers a person who is, or could be, a party to a real estate transaction meant to persuade that person to enter a particular real estate transaction. Essentially, inducement is offered to help someone close a deal. So, you are getting somebody to close the deal.

A real estate transaction could be anything related to commercial or residential real estate. It could be a purchase contract. It could be a sale; it could be a lease or a tenancy agreement. Any of these where the brokerage is offering something to sign the agreement or close the deal is an inducement.

Key Points to Remember:

  1. Inducements must have broker approval.
  2. To offer an inducement, a real estate professional must receive written approval from their broker, and they must give these details of the inducement in writing.

Let us look at some examples of appropriate inducements. 

Example 1:

Home Sense Realty offers to pay for new appliances if the client accepts the seller’s offer and buys the property.  

So, this is an example where somebody wants to buy the property, so they are basically signing the deal and as part of that, they will get new appliances from the brokerage. So, inducements are always offered by the brokerage and paid by the brokerage.

Example 2:

ABC Realty offers to pay a buyer’s legal fees if they purchase a particular property.  

So, in this case, Inducements are being offered by the brokerage. They are paying their legal fees and as a result, this is an appropriate inducement example.

Now let us look at some examples where the inducement is not appropriate. 

Example 1:

A property manager offers free advertising to a property owner as an inducement to sign a management contract. 

In this case, because this is being offered by a property manager, not on behalf of the brokerage, that is why this is not an appropriate example of an inducement.

Example 2:

A real estate professional offers to pay moving costs for the seller client if they agree to the buyer’s offer and sign the contract. 

Here, the inducement is being offered to sign the contract and close the deal. However, it is being offered by an individual real estate agent, not through a brokerage and therefore, it is not an appropriate inducement.

To summarize, incentives are used to attract new customers to the brokerage, or new business to the brokerage, whereas inducements are used to get a specific consumer to sign a deal. Incentives attract new businesses, whereas inducements can close a deal.

SAMPLE QUESTIONS

Example 1:

What is the difference between and inducement and an incentive?

A. the purpose of inducements is to bring business into the brokerage whereas incentives are used to motivate clients to move forward with a deal.

B. the purpose of incentives is to bring business into the brokerage whereas inducements are used to motivate clients to move forward with a deal.

C. incentives are used by brokerages to generate business for the associates whereas inducements are used by associates to get their clients to sign the deal.

D. inducements are used by brokerages to generate business for the associates whereas the incentives are used by associates to get their clients to sign the deal.

The correct answer is B. The purpose of incentives is to bring business into the brokerage where inducements are used to motivate clients to move forward with a deal.

Example 2:

Which of the following is an example of an incentive?

A. A brokerage advertises that all new listings will be entered into a draw for a new patio swing set.

B. A real estate professional offers to pay for moving boxes for anyone who lists a property for sale with him in the next 30 days.

C. Associate Winny Chan offers to pay his seller client’s appraisal fees if they accept the buyer’s offer and sign the deal.

D. All the above.

The correct answer is A. It must be offered through a brokerage, so if a brokerage advertises that all new listings will be entered into a draw for a new patio swing set, that is the correct answer.

Example 3:

The statement: Anything a brokerage offers or gives to a person who is, or could be, a party to a real estate or mortgage transaction, meant to assist, persuade or cause that person to enter into a particular real estate or mortgage transaction describes which of the following?

A. an inducement

B. an incentive

C. a referral

D. enticement.

The correct answer is A, it is an inducement.

Example 4:

Which of the following is an example of an inducement?

A. XYZ Realty offers the use of their company moving van to anyone who lists a property for sale with them in the next 30 days.

B. Associate Debra Smith tells her seller clients that her brokerage would pay for legal fees if they accept the buyer’s offer and sign the deal.

C. ABC Home Realty offers a $1000 Best Buy card to help with the purchase of new appliances if the buyers accept the seller’s offer and close the deal.

D. Or associate Jane Kelley offers a $500 Visa gift card to anyone who buys their next home through her in the next 30 days.

The correct answer here is B and C. Option B states that Associate Debra Smith is offering the inducement on behalf of the brokerage, which is correct. And in Option C, ABC Home Realty is a brokerage that is offering the inducements. Thus, both of those answers are correct.

Example 5:

Which of the following statements describe the details of an incentive?

A. An incentive must be offered by all real estate professionals registered with the brokerage.

B. An incentive must be available to all members of the public to attract business to the brokerage.

C. The incentive is provided by the brokerage and paid for by the brokerage.

D. All the above.

In this case, all these options are correct.

If you need some extra support in understanding the complex terminology and definitions of Real Estate, call us directly at 587.936.7779.

What is Real Estate Assurance Fraud?

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How to Pass the Alberta Real Estate Exam

A Video Tutorial by Raman Gakhal of Alberta Real Estate School sharing tips to pass the Alberta Real Estate Exam in the first attempt.

To pass the Alberta Real Estate Exam in the first attempt is not everybody’s cup of tea. RECA (The Real Estate Council of Alberta) has laid down strict guidelines to be followed in order to appear for the exam and remain an eligible candidate. To understand the RECA Exam structure, there are a few focal points that must keep in mind. These tips can help you manage your real estate study guide and thus, come through the test with flying colors.

Understand the Exam Format

Aspirants applying for Alberta Real Estate Exam to become successful Real Estate Agents should understand how the exam structure goes and what is the whole process.

Online:

First thing you want to do when it comes to studying for the exam is to Understand the Exam Format. This step is very important because it will help you to become more efficient when you go to study for your exam. What you want to remember is that it is a computer-based exam, so you are not really writing any essays or anything.

When you go to the examination center, they will give you some paper and a pencil to write notes if you need to. But overall, you are not writing anything, it is all online.

Number of Questions:

You will have anywhere from 90 to 140 exam questions, depending on what exam you’re writing. If you are writing the fundamentals of real estate exam, there are 140 questions.

If you are writing residential exam, you will see 100 questions on the exam. If you are writing a commercial exam, you’ll have 90 questions. So, it really depends on what exam you are writing, but approximately 90 to about 140 questions is what you will see on the exam.

Minimum Passing Grade:

Regardless of what exam you’re writing, you do need a 70% to pass the Alberta Real Estate Exam, so you have to make sure you get more than 70% on your exam.

Question Structure:

All the questions on the exam will be multiple-choice questions, so you really don’t need to really memorize a ton of stuff, because everything will be in front of you, and you also don’t need to really write long essays, so multiple-choice questions are simpler to answer than essay questions, so we have a bit of an advantage there.

Create a Study Plan

Create a concrete Study Plan and understand the total content that would be required to memorize for your Alberta Real Estate Exam. And different things you want to keep in mind, or different elements of a study plan that you want to pay attention to, would be first to create a study schedule. Make sure you set time aside in your schedule to study.

All of us are busy, you may have a full-time job, a family, other activities that you need to participate in, so make sure you do set aside a certain amount of time, whether that’s every evening or it’s on the weekends, but make sure you set aside time that is in your calendar in order to study.

Otherwise, you will run out of time in the end, and you’ll be scrambling to study or go through all the material at the very end, and then it becomes very difficult to do. Make sure you create a study schedule, and you stick to it.

Break it down into Smaller Steps

Make sure you break down this goal to pass the Alberta real estate exam into smaller steps. So, you want to look at how many units you have and how much time you are going to spend per unit in order to do this, in order to finish all the material.

Again, if you leave it all to the end, it will become very difficult to cram everything. You will not understand the concepts and you’ll be trying to memorize stuff, so we do not want to be in that situation, or I have found that people run out of time, and then they have to pay again to take the course.

Set Realistic Goals

If you think you can go through the entire unit in a day, that will be hard to do. So, it is best to, again, break it down into smaller chunks and make sure you’re setting realistic goals for yourself in order to achieve this.

Understand the Distribution of Marks 

Next thing you want to do is to make sure you understand the marks distribution. All the units are not weighted equally. Some of the units will have a very small percentage of marks on the exam, others will be heavy units where you have a ton of stuff to study, so I highly recommend before you start studying, you look at your mark distribution, you will find this in your textbook.

So go through the exam distribution, and then look at how much time you need to put towards each unit. For example, in the fundamentals of the real estate exam, the first unit is only worth three marks. That means that that is not a priority. Understand the Exam Weightage given by RECA to the topics based on the units from each of the Real Estate Courses.

We need to prioritize the stuff that is weighted heavier, so make sure you look at your exam distribution, and you are allocating the appropriate amount of time to each unit based on the percentage weightage it is allocated in the exam.

Understand the Concepts

Next, you want to make sure you understand the concepts. It is not important to memorize everything. It is a multiple-choice exam. So, there is no need to memorize everything because things will be in front of us, they will ask us a question, and the options will be in front of us. But what we do want to do is understand the key concepts, because once you understand the key concepts, you will have a much easier time answering the questions.

So, make sure you understand the concepts and kind of stay away from trying to memorize stuff. There are a couple of different types of questions that you will see on the exam.

Most of the exam will be around Situational Questions, also called scenario type questions, where they will give you a scenario, and then based on that, you will have to answer the question. This is where your understanding of the concept really pays off. Once you understand the concept, you can then look at your scenario and extract the key element from that. All the names and places don’t really make that much of a difference, but go to the heart of the problem, look at what exactly are they asking you.

But then, how do you prepare yourself for the scenario questions?

Go through all the Examples

The best thing to do here will be to go through all the examples. There are a lot of examples that they provide you in the textbook, make sure you go through these examples, all the examples are in a box.

So, when you look at your book, you will see there are several boxes there. And each example will relate to the concept that they’re talking about, so make sure you read through all your examples, and you understand the concepts related to that, because a lot of times they will have questions that will be similar to the examples that they have provided in the book.

Now they may change the names and places, however, the heart of the problem is still the same, so make sure you go through and read all the examples.

Go through each of the Unit Quizzes

Next thing is to make sure you go through unit quizzes. Unit quizzes are very important because they really help you understand the concepts.

Now, they do not have a ton of scenario questions, but there are scenario questions that you can learn from the quizzes, but they really help you prepare the concepts.

Another type of questions that you will see on the exam will be Definition-based Questions. Here, either they are looking for a definition of a term, or they will give you a definition, and they will ask you, what term does this definition describe?

Key Terms

Make sure that you understand your key terms like real property, real estate, GDP, condominium plan, different types of condominiums, that type of stuff. So, to answer the definition-based questions, we really want to understand the key terms.

There is a glossary at the end of the book that you can go to, and you can read through that glossary and make sure you understand the terms.

On the other hand, Alberta Real Estate School helps you understand the Real Estate Terminology and Regulatory Bodies that help you assist in understanding the Alberta Real Estate Market.   

Unit Activities

It’s also important to go through the unit activities. Unit activities are set up to help you understand the definition-based questions, especially the fill in the blanks type of activities.

These activities are great because they will help you understand the key term and learn the definition of this. Now, there are not any fill in the blank type of questions on the exam, but again, we are learning the key terms here.

With Alberta Real Estate School, we can guide you with our extensive list of Mock Questions and Practical help for Unit Quiz. Get to know more about our Real Estate Tutoring Services.  

Make Notes

And last of all, make sure you take notes as you are going through your material, because we do not want to spend too much time going through every single page of the textbook, so it will be important for you to extract the key concepts and key terms that you want to learn.

And when it is time to prepare for the exam, you’re only going through your notes, and you don’t have to go through the entire book again.

Our Extensive Notes are filtered with key areas of focus to minimize cluttered content into summarized pieces of information to help you understand the concept better. It will also help you prepare for your exams in a much simpler format. 

Get access to a sample of our special filtered notes by signing up HERE.

What Else do you Need?

All of these are just strategic goals that you can follow to achieve a sense of perfection in your preparation. The real test comes in when you try to give your best but that is not enough. That is when some genuine help from experts serve the purpose. Raman Gakhal, our Instructor at Alberta Real Estate School is best at giving personal tutoring on Real Estate topics. We can offer niche and specific advice on the important topics that you can expect in the exam.

“Alberta Real Estate School makes a Difference. It helps you pass the Alberta Real Estate Exam in the first attempt!”

We offer condensed and filtered Notes as compared to the 500-Page Manual with one-on-one Tutoring Sessions and QnA Sessions with Mock Exams and Solutions discussed with reasoning. Have a look at our checklist that guides you on:

How to Become a Real Estate Agent in Alberta.

If you wish to get focused notes with break-down of sample questions and other study materials to prepare for the Alberta Real Estate Exam, you can connect with us at directly at 587.936.7779.

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