Principles Of Real Estate 2 Part 1

Refers to the loss in desirability of the style, layout, or function of an element of a property over time

The approach used as the best indicator of value for existing properties

The legal use for property that gives the greatest return in money and/or amenities

The price a willing seller will sell for and the price a willing buyer will pay

The loss in value of a property caused by factors outside the property itself

An appraiser’s opinion of value.

Lenders use them to determine the market value of the property being used to secure the loan

The percentage of value or sales price that a lender is willing to finance

The property being appraised

A property’s value is equal to the sun of the contributory value of each of its component parts

Example: adding a swimming pool to a property for $50,000 might result in a contributory value of only $20,000

A appraisal has a relatively short shelf life

Forces of change can be specific or external to the property

Example: Adverse site conditions, a zoning change or damage to the improvements

Purchase price is affected by the expectation of future appeal and benefits

A commodity’s value is influenced by the cost of acquiring a substitute or comparable item

Value is maximized when there is a reasonable degree of homogeneity or sameness in a neighborhood

- Houses in a neighborhood also tend to conform in value to each other

It is prudent to improve property when the value added by the improvement exceeds the cost of the improvement

When the demand for real estate is great, and the supply is short, prices in the marketplace go up.

Likewise, when the supply is high and demand is low, prices decline

The presence of lower-prices properties in the area will cause a decline in the value of the subject property

The absence of competition will cause prices to increase in the marketplace.

Conversely, increased competition tends to bring prices down

Mixed land use should result in the maximum value for all properties involved

Example: master planned community

Demand

Utility

Scarcity

Transferability

Sales comparison approach

Cost Approach

Income approach

Aka Market data approach

Appraiser focuses on recent sales in determining the value of the subject

- The appraiser will gather at least three comparison sale aka “comparables” or “comps”

These comparable are recently-sold properties of similar type, size, quality and locale as the subject.

Considered most reliable approach

Market value of the property is considered by how much a new structure of this size and type would currently cost to build

The reduction in the value of a property due to deterioration or obsolescence

Is the loss in a property’s value due to daily wear and tear

Is the loss in desirability of the style, layout or function of an element of a property over time

According to Value Taxes

Standards that have been established by the Appraisal Standards Board of the Appraisal Foundation

Fannie Mae Form 1004

Fannie Mae Form 1004

The value of a subject property is increased by the value of surrounding properties

Does not always equal price

If a property in a market area is too abundant, it has reduced value

Ordered by lenders when dealing with high-LTV loans

The market in which borrowers and lenders come together to create and negotiate the terms of a mortgage transaction

The practice of refusing to provide financing in a particular location

The process of making a lending decision

The legal process under which property may be sold to satisfy an unpaid promissory note

The process of creating a new mortgage loan

Once the application is complete, the file moves into the processing phase

During this phase, the loan processor will “build a file” that will be used to make an underwriting decision.

The closing of a real estate transaction in which all appropriate documents are signed and the proceeds of a mortgage loan are disbursed by the lender

The process of transferring funds to a escrow company for disbursement

Includes sending monthly payment statements and collecting monthly payments, maintaining records of payments and balances, collecting and paying taxes and insurance (and managing escrow and impound funds), remitting funds to the note holder and following up on delinquencies

Exists for the purchase and sale of existing mortgages to investors.

PENSIL

Property Address

Estimated Value

Name of Borrower

Social Security Number

Income

Loan Amount

Is the interest rate a Reserve Bank charges eligible financing institutions to borrow funds on a short term basis.

- Set by the boards of directors of the Federal Reserve Banks

- Is subject to approval by the Board of Governors

- Possible Prison Term

- Fine not to exceed $10,000

Title to land in the U.S can be traced back to its original owner

The right of the government to regulate and control the way that an individual uses their land

The governments right to tax real estate

The right the government has to take an individuals land if they die without a will or heirs

The governments right to take private land for public use

- Most common example of police power

Zoning laws regulate the use of land within a municipality. ... Zoning is what keeps a residential district residential, a commercial district commercial, an industrial district industrial, and so on

If the proposed use of property violates zoning, the owners must request a variance - Permission to violate the rules

Is an area of land separating one land from another.

- The buffer zone is located between incompatible uses

- Example: Single family, apartments, retail. The apartments are the buffer zone

The action of the government taking land

Is property value for tax purposes

Land that has never been commercially developed

Land containing abandoned structures that are capable of redevelopment

Former commercial and industrial sites that have been suspected or proven to be contaminated

Are defined as the “transitional zones between uplands and deep water”

- Swamps, Marshes, bogs, fens, lagoons, and quagmires, etc...

A mold or mould is a fungus that grows in the form of multicellular filaments called hyphae

EIS A report that includes a detailed description of the proposed project, including its purpose and need. Any alternatives to the proposed project could accomplish the purpose and how the project will affect the environment

Greywater includes all wastewater generated in the home, except toilet water (which is considered “blackwater”). ... Plants and microorganisms in the soil consume and filter the organic nutrients and bacteria found in greywater, treating it naturally and returning clean water to the water cycle

Works with a seller to list property with a brokerage firm

Represents a buyer in a real estate transaction

Examines a home and prepares a report that lists deficiencies in a property

Protects and enhances the value of a property while generating income on behalf of the owner

Specializes in “working” farms and ranches.

Defined as any real estate that is not residential

Unimproved property the license holders specialize in

Unimproved property the license holders specialize in

In real estate, the buyer is generally not the end-user of the property

Leasing agents may represent residential or commercial landlords and tenants

REO when a lending institution becomes the owner of a property through a foreclosure, the property becomes an asset of the company

Is not well defined.

Includes many activities including REO and short sales

In which a property with the consent of the lender, is sold by an owner or borrower at a price that is not sufficient to pay off the existing mortgage

May call a real estate auction without a license

Resort Communities

Short term rentals or vacation rentals

Specializes in a particular type of property such as multi family, office buildings or retail space

Residential developers subdivide larger tracts of land into smaller parcels for resale of individual land or builders

Who originate loans for federally regulated depository institutions or their subsidiaries must be registered

Are specialists who estimate the value of properties for owners, lenders, estates and taxing authorities

The passive increase in the value of a parcel due to market forces

The ease of converting an investment into cash

Deducted from gross income to determine the net operating income

Found by dividing the net income of a property by its sales price

The amount of rent that will be collected in a year, assuming that a property was fully rented with no vacancies and no credit losses

Is derived from the collection of rents and other revenue streams from a property

The increase in value in a parcel of land due to the activities of the owner/ developer. A parcel of raw land developed into a subdivision or shopping center gains value

Operating expenses are deducted from gross income to determine NOI

Or loss is realized when a property is sold. Profit when an asset is sold

A method of raising funds for the purchase of a real estate investment

Create by Congress in 1960

Let’s investors invest in larger commercial properties by purchasing shares in a organization that owns real estate

Allows for the indirect investment in mortgage through the sale of securities.

A real estate mortgage investment conduit purchases “pools” of mortgages