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Historically, people joined the real estate industry with little or no formal training.  That perception is changing as large institutions start to dominate, as more organizations offer certifications and as the industry becomes more professional.  That thinking has not yet penetrated many business schools in Canada: an August 2012 Globe and Mail article included the quote:  “Real estate … is the biggest thing you never learn in business school.” (Since this article mentioned another university and completely ignored our 20 year old program, I am pleased to say that comments from our students corrected their oversight.)  So, you may ask, what are the big ideas that should be learned?

In my opinion, the most important ideas when studying real estate are

  • Create Value [1] [2] [3],
  • Long Term Perspective [1],
  • Real Estate Is Immobile [1],
  • Financial Analysis [1] [2] [3],
  • Negotiation [1] [2],
  • Communication [1] [2].

Learning any new idea is hard. Associated with each item on this list are many techniques and a specialized vocabulary.  As an undergraduate student, I found it hard enough to learn the techniques being taught.  As a graduate student and junior professor, the techniques became even more complicated and the ideas seemed to focus on various special cases.  With more time and experience, I find that techniques can be grouped and each group can be associated with a Big Idea.  More importantly, learning these Ideas make the techniques easier to understand, to know when to apply which one and simplifies communicate the results to others.

This list is short enough to be easy to remember, even if remembering will not solve any test question directly.  The real value of learning this list is that people who forget any one of these items tend to run into trouble in the real estate business; they either lose perspective on the real problem or because, after forgetting why they are using this or that technique, they make bad decisions.

Each of these ideas will be explored in more detail in later posts.  Some of the details may be obvious but, being fundamental, their implications cover more than the obvious.  These ideas also complement each other.  For example, implementing an idea which Creates Value usually requires someone to Negotiate a long term deal by using Financial Analysis intelligently in order to generate a sustainable profit over the Long Term.  Later posts will show that each one of these ideas is so important that it appears in various disguises in different classes, that forgetting it leads people into difficulty, how it is embodied in various techniques, and how it helps when facing a question so new that it is not in any textbook.

While I hope that all my students remember all of the bits of wisdom that I offer in class, I am smart enough to know that some of the bits are not as good as I hope.  For reasons that may be made obvious by the comments in later posts, I assert that these Big Ideas are so important that they are what we would like graduates to remember five years after they leave the Real Estate and Housing major at the University of Guelph.  This list also helps to illustrate some of the reasons why the real estate business, though often overlooked as a field of study, differs from other sectors in ways that are intellectually challenging and interestingly applicable.

PA

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