THE REAL ESTATE BUSINESS AND ITS INTERESTS 1. Real estate a business, not a profession.—Real estate sometimes is inaccurately spoken of as a pro fession, but it is essentially a business. A profession applies science, art or learning to the use of others, the profit to the professor or person applying it being incidental. On the other hand, business is engaged in primarily for profit, and the profit goes to those who engage in it.
A profession implies attainment. in special knowl edge. A person may engage in business with or with out special knowledge and no one else is concerned with the question whether he has any knowledge of the business, because no one else is affected by the result. If he is successful, the rewards are his ; if he fails, he bears the loss. But let him attempt to prac tise a profession and others are directly affected, if he is unskilful. The fact that his reward is diminished by his lack of skill is merely incidental to the fact that others suffer.
2. Ethics of the business.—Whether real estate is a business or a profession has no connection at all with the ethics governing it.
Every business can be conducted on a plane as high ethically as the ideals of any profession, and the men who been conspicuously successful in the real estate business have attained success because they have applied there the highest ideals of commercial fair dealing. This does not mean that there is any ethical requirement for the seller or the purchaser to give away anything which belongs to him, or for either one to disclose to the other his necessity for selling or` his requirements for buying. It is absolutely necessary tho, that when the bargain has been made, it be lived up to by both parties according to its true intent. If there be any doubt of the intent of the bargain as it is expressed in writing, the 'spirit of the transaction should be carried out rather than the catch words of a written instrument. Men frequently perform the thing which they have promised to do, altho it may be to their own detriment and altho they may not be legally obligated. Again, the bigger and more suc
cessful the man who makes the promise, the more surely will it be carried out. Important obligations are often incurred upon the mere promise of a well known man to sell an important piece of property at a definite price, altho no legal and enforcible obliga tion exists. The promise is always redeemed if it is made by a man who knows the business, and it is re deemed not merely from altruistic motives, but also for purely business reasons.
3. Divisions of the business.—The principal di visions of the real estate business are investment, op eration and agency. These differ from one another according to the aims of the persons engaged in them and the methods by which those persons expect to make their gains. To conduct either of the first two divisions of the business, investment or operation, actual money capital is required. The most impor tant capital in the agency business is the good-will of its customers, and that can be husbanded, increased and made very valuable.
4. Investment in real is the employment of capital in acquiring some interest in real estate for permanent ownership, or for the actual use of the investor. The investment may take one of the following forms: (a) Purchase of land or leasehold for use and occu pation of the investor.
(b) Purchase of land or leasehold for the purpose of renting to others.
(c) Purchase of land or leasehold to hold for resale in expectation of an increase in value.
(d) Making loans secured by real estate mort gages, either freehold or leasehold.
5. Operation of real estate operations means the use of capital in conducting commercial en terprises, using real estate as the stock in trade. It includes: (a) The purchase of land and its resale.
(b) Erecting buildings.
(c) Making mortgage loans.
The purchase and sale of land deals with land as a thing to be bought and sold at a profit or a loss. It may be divided into two parts : (1) Speculation, by which the operator buys land hoping its value will rise. He sells, when his hope is realized, or when be finds it to be unfounded.