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327 Cards in this Set
- Front
- Back
4 Components of Change
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Cycle of life: growth, equilibrium, decline, and revitalization.
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4 ECONOMIC CHARACTERISTICS OF REAL ESTATE
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1. Scarcity 2. Improvements 3. Permanence of investment 4. Location
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4 PHYSICAL CHARACTERISTICS OF REAL ESTATE
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1. Immobility 2. Indestructibilty 3. Uniqueness 4. Specific Performance
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Absorption Study
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An analysis of supply and demand concentrating on the aspects of changes in product inventory when properties are offered and sold. The focus is to identify the proper inventory which creates balance.
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Accession
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Additional property rights that an owner acquires when improvements (e.g. new carpet, paint, etc.) and/or additions are attached to the property by the tenant at the tenant's own cost. This legal right means that the owner will acquire any improvements to the property upon termination of the lease.
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Accretion
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Land located next to a body of water increasing due to water depositing additional soil (or waterborne solid material) gradually.
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Accrued Depreciation
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The total amount of depreciation attributable to the property.
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Acre
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An area consisting of 43,560 square feet.
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ADS
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See Annual Debt Service.
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AGRICULTURAL
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Farms, timberland, ranches, orchards, etc.
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Alluvion
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The washing against a shoreline; depositing sand or soil so as to gradually form firm ground.
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Amenities Benefit
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A gain resulting from a quality of life issue. Can be tangible, or intangible, on the property or off.
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Amortization
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The equal payment amount necessary to satisfy the interest and principal of a loan.
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Amortization of $1
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The period payment schedule necessary, including interest and principle, to reduce a $1 (or any amount) debt with equal payments. See "Mortgage Constant". One of the six functions of a dollar found on standard financial tables.
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ANNEXATION
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To change personal property into real property.
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Annual Debt Service (ADS)
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The annual payments of a loan. The annual debt service is figured by multiplying the mortgage payment by the number of payments in one year. Remember, annual debt service includes both the annual interest and principle payments.
Formula: Monthly mortgage payments (with principle and interest) x 12 months. Example: For example if the mortgage payment is $5,000/mo. The Annual Debt Service = 5,000 x 12 mos. = $60,000. |
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Anticipation
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A purchase/sale decision based on the perceived future value.
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Appraisal
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The act or process of developing an opinion of value, or an opinion of value based on generally accepted appraisal methods.
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APPRAISAL
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The process of estimating a property's market value
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Appraisal Methodology
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Generally accepted processes to identify value.
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Appraisal Process
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The principles and concepts used in estimating property value.
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Appraisal Standards Board (ASB)
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A committee under the Appraisal Foundation created to develop professional standards of practice for appraisals.
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Appraisal Subcommittee
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The government oversight entity charged with ensuring appraiser compliance with the federal laws. Their mandate includes, monitoring the FFIRA, states, and the Appraisal Foundation for compliance wit Title XI, and maintaining a registry of appraisers eligible to appraise FRT's.
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Appraiser
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One who performs professional appraisal services for client's, using generally accepted appraisal methods and adhering to all state and federal guidelines.
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Appraiser Qualifications Board (AQB)
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A committee under the Appraisal Foundation created to establish appraiser qualifications.
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APPURTENANCE
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A right or privilege associated with the property, although not necessarily a part of it.
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Arm's Length Transaction
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An agreement in which neither side has an unusual advantage, or overriding influence.
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Assessment
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A value amount placed on a property by the local community for taxation purposes.
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Attached Type
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More than one unit connected together, having at least one common wall.
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Avulsion
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To tear off. The sudden loss of land or soil due to a sudden natural act (e.g. earthquake, sudden change of river flow, etc.).
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Balance
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Occurs when supply and demand factors at the point of equilibrium.
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Band of Investment Method
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Is used to determine the overall rate of return on a property which is encumbered by a mortgage
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Bilateral Contract
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A contract where both parties have made promises in exchange to the other party, therefore a "meeting of the minds" has occurred and both parties are willing participants in the contract.
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BROKERAGE
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The business of bringing people together in a real estate transaction
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Buffer Zone
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Space of land between 2 zoning districts
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Building Permit
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A document used to track compliance with codes
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Bundle of Rights
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The combined dominion over utilization of a property, including possession, control, enjoyment, and exclusion.
The bundle of rights are commonly known as these six rights. 1. The right to use and occupy the real property 2. The right to sell it in part or in whole. 3. The right to leave it to someone (will), give it away etc. (bequeath) 4. The right to rent/lease it. 5. The right to transfer the property by contract. 6. The right to do nothing at all the property. |
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BUNDLE OF RIGHTS/STICKS
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Possession, control, enjoyment, exclusion, disposition.
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Bundle of Sticks
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Control, Possesion, Enjoy, Dispose
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Capital
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A sum of money available for investment
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Capital Gain
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A sum of money or profit made from a sale of an asset.
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Capital Improvements
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Renovations or modifications that change the characteristics of the property.
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Capitalization Rate "R"
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Income to value percentage used as an indicator of value. A Capitalization Rate is the rate your investment is paid back and is typically based on the Net Operating Income (NOI). See "IRV" also
Formula: I/V = R I/R = V VxR = I Example: If you invest $1,000,000 on a property that has an NOI of $100,000, the Cap rate is 10%, meaning it will take 10 years to pay back the initial investment. This is the rate of return. If the NOI was $50,000, the Cap rate would be 5% and it would take 20 years to accumulate the original investment. |
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Census
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A counting of the populous conducted by the federal government every 10 years, as prescribed in the U.S. Constitution.
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Chattel
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Another name for personal property
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CHATTEL
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Personal property
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Chattel Real
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A personal interest in real property (a lease)
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CHATTEL REAL
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A personal interest in real property.
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COMMERCIAL
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Business property, including office space, shopping centers, stores, theaters, hotels, and so on.
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Common Area Maintenance (CAM) fees
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The operational and maintenance costs of the common areas.
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Competitive Market Analysis (CMA)
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Looking at sold properties, and properties currently offered for sale, to develop a listing price for marketing purposes.
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Compounding
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The process of combining two or more things to form one new whole. In the financial context, this is the process by which income is earned on income that had previously been earned. Interest income is earned on an initial investment amount plus the interest the initial investment had earned previously.
The process of finding the future worth of a dollar using a specified rate and time period. The reverse of Discounting. Also used to describe the frequency with which banks add interest onto principal. Typically banks compound Daily, Monthly, Quarterly or Annually. Example: If $100 is invested at a 5% interest rate (compounded annually), the investor will earned $5 in interest the first year and $5.25 the second year. The earnings of the second year are higher because the interest earned on the second year includes the initial investment amount, plus the interest earned the first year. |
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Condemnation
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Taking private property through eminent domain.
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Conformity
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The proper melding of the uniqueness of the individual property with the character of the neighborhood and the desirability of the market.
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Contemporary
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House style with modern construction technology, energy efficiency, and environmental considerations.
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Contract Rent
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Amount due to the landlord (from the tenant), per lease agreement.
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Contributory Value
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The amount of value that a solitary item, or a combination of all the items located on the property, enhance the value of the property.
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COUNSELING
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Involves providing clients with competent advice based on sound professional judgement
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Credit Unions
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Established originally by large organizations, trades, and other large employment groups. Credit unions are banks that operate for the benefit of their "members", are not-for-profit corporations, and are licensed under the National Credit Union Administration.
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Date of Sale
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The date certain accepted as the actual time a transaction consummation occurred. Could be the purchase agreement date, the closing date, or the recording date depending on local custom.
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Date of Value
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The effective date of the appraisal.
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Debt Coverage Ratio
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The ratio of debt to Net Operating Income.
Formula: NOI/ADS = DCR net operating income divided by annual debit service equals debt coverage ratio |
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Debt Service
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The amount of the annual loan payment.
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Debtor
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A person who owes another individual or company.
Example: Perfect Pools built a swimming pool for Paul. Paul never paid the contractor. Paul is the debtor. |
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Decision-Making Process
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The conditions and considerations surrounding the conclusion to act upon a purchase and sale.
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Decline
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When an item (property) is becoming less desirable, and exhibits increasing market resistance.
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Deed
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A document that conveys the title
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Deed of Trust
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The agreement between borrower and lender. Ensures 3rd party (trustee) will hold title of borrower until debt is paid to lender. This document gives a lender the right to foreclose on the property if the borrower defaults on the loan.
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Deed Restriction:
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A clause in a deed which limits the use of the property.
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Defeasible Fee
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A conditional interest in the land
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Delineation
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To describe something in words or sketch.
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Demographics
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Data related to trends, habits, or concentration of people.
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Detached Type
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A stand alone building.
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DEVELOPMENT
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Involves the construction of improvements on the land.
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Direct Capitalization
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Converting one year's income into a value estimate.
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Direct Market Extraction
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Isolation from a group of similar properties in the market for comparing to a target item or property.
Example: Appraiser gets selling prices and net operating incomes of competing similar properties that recently sold (direct market extraction method). |
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Discounting
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Calculating present worth of a future amount of money. Assumes future payments worth less based on lost opportunity to invest those funds for immediate profit. Reverse of compounding.
Explanation: A dollar spent in 5 years is worth less than a dollar spent today. Using a 6% discount rate, a dollar payable in 5 years is worth about 75 cents today. |
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Dividend
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Income from an equity investment.
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Dominant Estate
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Property that benefits from the easement, (one granted right of way and use of the servient property).
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Dower
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A marital interest in property
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Duplex
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Multiple housing units connected by at least one common wall.
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Duress
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Excessive pressure on individual to create a desired result.
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Easement
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Right to use or enter another person's land for a specific purpose.
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Easement
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The right to use the land of another
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Easement Appurtenant
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An easement that belongs to and therefore goes with the land regardless of future owners.
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Economic Age-Life Method
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Determine depreciation of improvements using a systematic annual rate from new condition to zero usefulness.
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ECONOMIC FACTORS FOR A PROPERTY TO HAVE VALUE
D.U.S.T. |
Demand- must be coupled with purchasing power.
Utility- the ability of the land to satisfy a want. Scarcity- must be a demand for land. Transfer-ability-land that cannot be transferred. |
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Economic Life
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Period that improvement is expected to return a value to its user, based on its intended use.
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Economic Rent
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Rent a property on open market could get if vacant and available. Aka market rent.
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Effective Age
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Age improvements appear based on chronological age, condition, and modernization.
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Effective Gross Income (EGI)
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The reasonable amount of gross income a property should produce after allowing for market vacancy.
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Effective Gross Income Multiplier (EGIM)
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Derived from the market and applied to the subject property's effective gross income (EGI) to estimate value.
Formula: sales price/EGI = EGIM |
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Eminent Domain
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Goverments right to take property
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Eminent Domain
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Right of government to take private property for a public purpose after justly compensating the property owner.
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Encroachment
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Extension of an improvement across a boundary
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Encroachment
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Permanent object from one property extends over onto another property illegally.
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Encumbrance
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Anything that affects the title of a property or limits its use, such as mortgages, judgments, leases, easements, liens, or restrictions.
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ENFORCEMENT OF PRIVATE RESTICTIONS
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Anyone who may be affected by the violation of a private restriction.
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Equilibrium
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Point in time when an improvement or a location is at its peak of desirability, and supply and demand are in balance.
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Equity Capitalization Rate (Re)
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Annualized rate of/on return that equity investors receive. Typically calculated on the property's pre-tax income of the first year. Aka equity dividend rate.
Formula: pretax cash flow/capital investment = Re |
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Escalation Clause
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An agreement to adjust prices/rent based on certain events or indices.
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Escheat
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Reversion of property to the state
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Escheat
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Transfer of property ownership to the state after the owner dies without a will and without living heirs.
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Escrow Agent:
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Independent entity who holds promised funds until agreed conditions have been met or a certain event has taken place.
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Excess Land (Surplus Land)
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The excess land of a property not needed to support the site's highest and best use.
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Excess Rent
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Amount by which contract rent exceeds market rent.
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Exculpatory Clause
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In a lease, this clause relieves the owner/landlord of liability for the tenant's property or personal injury. Also in a contract, this clause relieves one party to the agreement of liability as a result of actions or lack of actions performed in the course of executing the terms of the contract.
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Executed Contract
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A contract where all obligations have been fulfilled by all parties.
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Executory Contract
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Promises made in the contract in the process of being fulfilled. Promises yet to be completely fulfilled from involved parties.
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Expense Stop
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Maximum landlord/owner will spend in operating a property; when exceeded, tenant will pay the rest.
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Expenses (E)
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The costs associated with the operation of an income producing property. In formulas, shown as "E."
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Exposure Period
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Time a property has been available for sale and properly marketed.
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Express Contract
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Involved parties specifically agree on terms and state intentions in writing or orally.
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External Obsolescence
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Issue outside property lines that has a negative effect on the property's value.
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Externalities
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Influences outside the property lines that effect property's value either positively or negatively.
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FACTORS AFFECTING DEMAND
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Population, demographics, employment and wage levels
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FACTORS AFFECTING SUPPLY
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Labor force and construction and material cost, goverment controls and goverment financial policies.
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Federal Deposit Insurance Corporation (FDIC)
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Insures deposits in regulated financial institutions. Quasi-government entity.
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Federal Financial Institutions Examination Council (FFIEC)
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Organization founded in 1978 to train bank examiners and to develop flood or federal disaster relief rules and procedures.
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Federal Home Loan Mortgage Corporation
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A government sponsored enterprise (GSE), created to act as a clearinghouse for mortgages.
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Federal National Mortgage Association (FNMA)
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AKA Fannie Mae. Private investor group that purchases home mortgages. Founded in 30s as a public clearinghouse for mortgages as part of the New Deal.
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Federal Reserve Board (FRB)
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A private, quasi-government entity that oversees the operation of the Federal Reserve System.
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Federal Reserve System
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Private group of original monetary centers that control flow of currency (federal reserve notes). Founded 1913.
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Fee Simple
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Fullest form of freehold property ownership, affected only by the four great forces that influence value. Complete ownership with the right to occupy a property and sell it to a buyer at any time. Still under any limitations from the 4 government powers: taxation, escheat, eminent domain, and police power.
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Fee Simple Absolute
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An estate without conditions
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FEE SIMPLE ABSOLUTE
INDEFEASIBLE FEE |
Ownership without conditions
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Fiduciary
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Relationship between two parties; one has the responsibility to act for the benefit of the other.
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Financial Benefit
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Monetary gain from ownership.
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FINANCING
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Business of providing the funds that make real estate transactions possible.
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Fixed Expense or Fixed Cost
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Constant expenses that do not fluctuate with occupancy.
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Fixture
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Personal property that becomes real property when permanently attached to real estate.
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Fixture
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Personal property that is attached to real estate
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FIXTURES
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Personal property that has been afixed to real property.
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Four Great Forces that influence property value
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Social, economic, governmental, and environmental.
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Freehold
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An interest in land that has no time limit
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Freehold Estate
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To possess property in full, complete ownership for an indeterminable length of time.
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FRUCTUS NATURALES
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Trees, shrubbery, fruits of nature.
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FRUTUCS INDUSTRIALES
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Crops (Personal Property) Emblements.
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Functional Obsolescence
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Item in the improvement no longer desired by the market based on the item's utility.
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Future Value of $1
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Amount to which $1 will grow in a specified time period. One of six functions of a dollar on standard financial tables.
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Future Value of $1 Per Period
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Amount to which a series of $1 payments will grow in a specified time period. One of six functions of a dollar on standard financial tables.
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Gentrification
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Rehabilitation of deteriorated neighborhood, often done by remodeling or tearing down structures in order to rebuild the area.
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Going-Concern Value
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Value created by a business operation as opposed to the value of its assets.
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Government Survey Method
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AKA Rectangular Survey Method. A form of legal description. Uses townships of 36 sq miles in 1 mile sections. 1 mile = 640 acres. 1 acre=43,560 ft. Two sets of lines: east-west Base Lines; north-south Principal Meridians. Every 6 miles are more east-west lines called township lines and north-south lines called range lines.
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Graduated Rent Lease
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Lease with periods of rent adjustments.
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Gross Income Multipliers
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Used to depict a property's ranking among comparable properties or to determine value.
Derived from analysis of sale price and gross rent or income. |
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Gross Lease
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Lease where costs associated with the tenant's occupancy are borne by the owner.
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Gross Rent Multiplier (GRM)
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Used to determine a property's ranking among similar properties. Divide the sale price of a property by its monthly or annual gross rent.
Formula: Sales price/gross monthly rent = GRM |
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Gross Rental Income
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Income of a property derived solely from rental sources.
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Growth
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Period in which a property or area exhibits strong desirability and maintains expansion.
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HETEROGENEITY OR NONHOMOGENITY
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Uniqueness of the land
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Heterogeneous
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Properties or characteristics that are not alike. Appraisal term meaning dissimilar.
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Heterogenity
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Uniqueness of land
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Highest & Best Use
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Most profitable, legally permitted, economically feasible, and physically possible use of the property.
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HIGHEST AND BEST USE OF LAND
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The use of land that will earn for the owner maximum value-not by zoning.
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Home Inspector
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Professional who analyzes the structural and non-structural components of a house to determine quality and condition.
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Implied Contract
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An agreement between parties demonstrated by acts and conduct, rather than exchanged promises.
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Improvement
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Items attached to the land such that if removed could change the value of the property.
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IMPROVEMENTS
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To improve the value of a property.
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Income Approach
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Using the relationship of income produced by the property and the property's value.
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Income, Rate, and Value (IRV)
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Formula used to estimate value using a property's net operating income.
I/V = R I/R = V V x R = I |
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Index Lease
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Lease that requires rent adjustments based on a specific economic data statistic.
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INDUSTRIAL
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Warehouses, factories, power plants, and so on.
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Injunction
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Court order to stop or perform a certain action.
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Intended Use
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Use of the conclusions of the appraisal report.
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Interpolation
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Determination of a number that falls between an established set of numbers on a chart.
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Investment
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A monetary or sweat equity participation in a commercial venture with the expectations of receiving a profit during a holding period or at the time of disposition.
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Investment Value
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An investment value is the value of an income property to a particular investor, based on that investor's particular requirements and situation.
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Investor
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An individual or group engaged in lending or participating in commercial ventures.
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LAND
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Earth's surface extending downward to the center and upward to infinity, including permanate natural structures. Trees & water.
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Land
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The surface and subsurface of the Earth
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Law of Decreasing Returns
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Cost of item is greater than expected value. Item is economically impractical.
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Law of Increasing Returns
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Item value equal to or greater than its cost.
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LAWS AFFECTING REAL ESTATE
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contract law, general property law, agency law, real estate license law, federal, federal, state & local tax, zoning & land use.
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Leased Fee Estate
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Owner or landlord gives right to use and occupy a property to a tenant via a lease.
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Leasehold Estate
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To have some or all property rights for a specific length of time, but not actual ownership.
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Legal Description
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Statement of size, dimensions, and location of a property.
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Lessee
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Person leasing property (one paying rent to landlord).
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Lessor
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Legal owner of a property who leases to a tenant.
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Leverage
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The use of borrowed funds
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License
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Permission
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Lien
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A claim against a property
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Lien
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Claim on a property (personal or real) to secure a debt.
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Life Cycle of Real Estate/Neighborhood
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Growth, equilibrium, decline, and revitalization.
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Life Estate
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A form of ownership that ends when the owner dies. Person called life tenant. Property can not be left to an heir. Life estate names future owner (remainderman) upon death of the life tenant.
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LINKAGE
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Supporting land
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Linkage
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The time and distance from one place to another (e.g., from home to grocery store).
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Liquidation Value
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Value sought during a forced sale like foreclosure.
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Lis Pendens
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Notice that a legal suit has been filed against specific lands; may affect title to the land.
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Littoral Rights
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Rights of owners of land next to lakes, seas, and oceans. Landowners with littoral rights have unrestricted access to the waters but own the land only to the median high-water mark.
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Loan Officer
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Agent for lender who help borrowers get a loan.
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Loan Processor
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Lender's agent who processes loan documents, and often controls the completion of the transaction.
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Loan Underwriter
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Lender's agent who makes sure loan documents and appraisal meet all lender requirements.
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Loan-to-Value Ratio (LTV)
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Amount of loan on a property in relation to property's value.
Formula: Loan amount/property value = LTV |
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Long-Term Lease
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A lease of ten years or more.
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Lot and Block
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A form of legal description used in subdivisions (subdivided plat). Using a description of a subdivision and a reference to the lot number and block number.
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Market
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A set of arrangements that brings parties together
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MARKET
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Aplace where things can be bought or sold.
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Market Area
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Area in which other similar properties compete with the subject property in the minds of potential purchasers and users.
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Market Price
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Price actually paid by a buyer of an income producing property.
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Market Rent
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Rent a property could get in open market if vacant and available for rent. AKA economic rent.
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Market Time
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Time it will take for a specific property to sell at a specific price.
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Market Value
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Most probable price a property will bring (informed parties, fair sale).
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Masonry
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Concrete, stone, or brick construction materials.
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Mass Appraisal
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Appraisal of a group of properties or an area for the purpose of assessment and taxation.
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Matched Pair Analysis
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Comparison of two properties to determine how much one variable is contributing to the value.
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Mean
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Average value of a set of numbers.
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Median
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Middle value or midpoint in a series of numbers.
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Meeting of the Minds
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Agreement between parties on price and conditions of a contract.
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Metes and Bounds
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Metes = distance. Bounds = direction. Line extends in a certain direction from point of origin (metes). Points when the direction changes are called bounds. Continues until the line ends back up at the point of origin.
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Mill
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Mil = 1/1000 of a dollar. Tax rate in mils $1 for every $1,000 of assessed value.
If the tax rate is 10 mills, then you are charged $10 for every $1,000 in assessed value. If assessed value is $50,000, then taxes will be $500. 50,000/1000 = 50. 50 x 10 = $500. |
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Mineral Rights
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The right to remove minerals from the ground
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Mode
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Most frequently occurring number in a list of numbers.
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Mortgage
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Document pledging a real estate asset as collateral for a real estate loan.
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Mortgage Constant (Rm)
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Factor or multiplier used for amount to pay interest and principle over a specific period of time, with equal payments. AKA loan constant or mortgage loan constant.
Formula: Debt service/mortgage principal = Rm |
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Mortgage Constant Ratio
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The continuous factor necessary to pay the contract interest and reduce principle at regular intervals.
Formula: Yearly mortage amount (ADS)/loan amount = MCR |
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Mortgagee
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Recipient of the document pledging the real estate asset (lender).
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Mortgagor
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The person pledging the real estate asset (borrower).
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National Credit Union Administration (NCUA)
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Oversees the operation of the not-for-profit credit unions nationwide.
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National Mortgage Market
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Government and private groups of investors who buy mortgages from primary lenders. AKA secondary mortgage market.
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Net
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Profit after all deductions.
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Net Operating Income (NOI)
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Property's available income after deducting for operating expenses.
Formula: Gross rental income + other income - vacancy = effective gross income Effective gross income - expenses = NOI |
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Non-Conforming
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A land use that is differant from present-zoned land
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Observed Condition Method
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Judgment of appraiser in analyzing present condition of improvements compared to condition when new.
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Office of the Comptroller of the Currency (OCC)
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Oversees activities involving currency; operates under Treasury department; est 1863.
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Office of Thrift Supervision (OTS)
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Oversees control of Savings & Loan Association activity.
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Operating Expense Ratio
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Ratio of expenses to effective gross income.
Formula: total expenses/effective gross income = OER |
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Option Contract
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Gives buyer of contract right (but not obligation) to buy a property at a set price within a certain time frame. Holder of this contractual right usually pays a fee for this right.
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Other Income (OI)
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Income from sources other than rent: laundry facilities, vending, parking fees.
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Overage Rent
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Rent paid by a retail tenant based on a percentage of gross sales in excess of a specified dollar amount (breakpoint).
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Overall Capitalization Rate (Ro)
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Income rate used to identify relationship between property's total price or value and the single year's net operating income.
Formula: NOI/total biz value = Ro |
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Percentage Lease
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Tenant agrees to pay a specific base amount of rent every month, plus a percentage of any gross sales above a certain amount. Common in commercial properties.
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PERMANENCE OF INVESTMENTS
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The capital & labor used to build an improvement.
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Personal Property
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Items on the property there at the discretion of the owner (movable items like washing machine, television).
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Physical Deterioration
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Wasting away of an asset due to actions of the environment surrounding the improvement.
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Police Power
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Health, Safety, Welfare Regulation
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Potential Gross Income (PGI)
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Expected total annual income of property at full occupancy at market rent.
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Present Value of $1
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Value today of a future payment, considering compound interest.
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Present Value of $1 Per Period
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Present value of a series of payments due in the future with interest.
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Primary Lending Mortgage Market
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Local banks, credit unions, and savings & loan associations who lend money to individuals, secured by real estate.
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PRIORITY
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Where a property is regulated by zoning & private restrictions; which ever is more restrictive takes precedent.
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Progression
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When a property's value is enhanced by its association with superior properties.
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PROPERTY MANAGMENT
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A person or company hired to maintain and manage property on behalf of it's owner
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Property Operating Income Statement
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Financial statement created to illustrate a property's income and expenses.
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Proximate
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Distance between two or more items.
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Public Domain
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Information freely available for public consumption (e.g. public records).
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Public Law 101-73
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Federal law created to change the operations of the financial institutions and create appraiser laws.
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Public Perception
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Actions of market concerning value.
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Purchaser Base
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Availability of buyers in the market.
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Purpose
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Defining something in appraisal process, such as a value.
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Quality of Life
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Issues related to emotional well-being of a person.
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Quit Claim Deed
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Grantor transfers all his/her interests to someone else. A legal document by which a person "quits" any claim to property.
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Radon
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A natural gas
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Real Estate
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Land and all it's improvements
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REAL ESTATE
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Land at, above,& below earth's surface, plus all things permately attached to it.
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REAL ESTATE LICENSE LAWS
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To protect the public from fraud, dishonesty, and incompetence in transactions.
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Real Property
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Includes land and real estate plus a legal bundle of rights (or Sticks)
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Real Property
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Rights associated with property ownership.
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REAL PROPERTY
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The interest,benifits,and rights that are automatically included in ownership of the land and real estate.Legal bundle of rights.
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Realtor
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A member of the National Association of Realtors.
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Reconciliation
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The analysis of the combined data collected, appraisal methods performed, and the professional judgment of the appraiser, culminating in a final decision.
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Regression
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When a property's value is diminished by its association with inferior or dissimilar properties.
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Reliction
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Water line recedes and leaves the exposed land permanently dry. Also known as dereliction.
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Remainderman
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Person entitled to a future interest of a property upon the death of the former owner.
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Remaining Economic Life
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Period in which a property will return a value to its user.
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Renewal Option
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Provision in lease that gives the right (not obligation) to the tenant to extend the lease for a given amount of time, at a specified rent amount stated in the option.
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Replacement Cost
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Cost of rebuilding of an improvement or structure with an item of same utility.
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Reproduction Cost
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Cost of rebuilding of an improvement or structure with an exact replica.
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Reserve for Replacements
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Monies set aside for the repair or replacement of short-lived items.
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RESIDENTIAL
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All property used for single family or muti family housing whether in urban, suburban or rural areas.
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RESTICTIVE COVENANTS
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Land use that may be controlled privately through deed restrictions by developer or land owner.
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Restrictive Covenants
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Use restrictions placed on a property by a private entity (previous owner or a homeowner's association).
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Reversion
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Return of rights of use and possession to the lessor at the expiration of a lease.
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Reversionary Interest
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Remnant of an estate that grantor holds after granting a life estate to another person.
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Reversionary Right
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Return of rights of use and possession to the lessor at the expiration of a lease.
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Revitalization
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Natural or government enhanced renewal of an area.
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Ridge Board
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A horizontal board that serves as the highest point of the roof structure.
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Right of First Refusal
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Arrangement that grants a particular potential buyer the first right to purchase a property, given certain agreed-upon conditions, if the owner decides to sell.
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Riparian
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Land next to streams or rivers. Owners have rights of use and ownership to the average high water mark.
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Runs with the land
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Legal restriction to the land in a deed binding for current and future owners.
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Sandwich Lease
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Sublease. The person subleasing the property to another is the sandwich party because he is between the owner and tenant.
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Savings & Loan Associations
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Investment group based lenders and financial services institutions.
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Scarcity
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The usable supply of land in an area
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SCARCITY
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The useable supply of land in an area.
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Secondary Mortgage Market
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Groups that purchase home loan mortgages from the Primary Lending Market.
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Servient Estate
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The property giving rights to another property (right of way, easement).
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Set Back
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Space between a property and a building line
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SEVERANCE
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An item of real property can become personal property. EX: a tree is real property til the owner cuts it down.
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Site
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Land improved with utilities and so on in anticipation of development.
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Situs
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Aspect of location that contributes to the market value of a real property. Where the property is located for legal purposes.
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SITUS
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Location. Area preference.
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SPECIAL PURPOSE
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Churches, schools, cemeteries, and government-help lands.
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Specific Performance
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A law suit to force completion of a contract
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Specific Performance
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Court order requiring a party to fulfill the contractual agreements or face possible imprisonment. Possible when monetary damages would not suffice and an adequate alternative remedy is not available.
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Square Foot Method
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Technique to measure the size of a structure based on exterior measurements.
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Statute of Frauds
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Real estate contracts must be in writing in order to be enforceable.
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SUBDIVISION
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Splitting of a single property into smaller parcels.
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Sublease
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Person leasing a property leases it to a third party for payment of rent for period no longer than original lease.
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Subordination Clause
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Mortgage clause that allows subsequent mortgages on the same property to have higher claim or right than the current mortgage. Makes other debts or rights secondary to the claims of another party.
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Substitution
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A knowledgeable buyer will pay no more for one item than for a comparatively equivalent substitute.
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Supply and Demand
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Relationship between availability and desirability.
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SUPPLY AND DEMAND
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When supplies increase and demand remains stable, prices go down. Or Vice Versa.
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Surplus Land
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Excess land of a property not needed to support the site's highest and best use.
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Surplus Productivity
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Net real property income after all the costs of labor, capital, and management have been paid.
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TEST FOR FIXTURES
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1. Intent of the annexor 2. Method of annexation 3. Adaption to the real estate 4. Agreement
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Time Value of Money
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Analysis of the worth today of payments to be received in the future.
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TITLE
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Ownership of real property, not a printed document.
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Title
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The legally recognized interest someone has in land.
Evidence of ownership. |
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Title XI
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Regulations governing the appraisal profession.
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Townhouse
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Multiple housing units connected by at least one common wall.
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TRADE FIXTURES
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Fixtures used in the course of business. Something owned by the tenant & attached to a rented space.
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Trade Fixtures
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Items owned by and attached to leased property, by a tenant who is conducting a business.
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Traditional
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Most common style of residential construction.
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Trust Deed
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Agreement between borrower and lender. Trustee holds title of borrower until debt is paid to lender. Gives a lender right to foreclose if borrower defaults.
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Undivided Interest
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Apportioned ownership that happens when two or more parties have interest in the same property. May be equal or unequal.
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Uniform Standards of Professional Appraisal Practice (USPAP)
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Minimum standards and guidelines for appraisals.
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UNIQUENESS AND IMMOBILITY
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The 2 characteristics of land that have the most impact on the market.
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Unities
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Time, Title, Interest, Possesion.
(PETE) |
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Utility Easement
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Right to use or enter another person's land for utility lines.
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Vacancy (V)
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Potential occupancy vs non-occupied units.
Symbol is "V" in formulas. |
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Variable Expense
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Expenses affected by the property's occupancy such as painting and management fees.
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Variance
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Relief from the harshness of zoning
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Waste
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Destruction of property
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WATER RIGHTS
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Special common-law rights held by owners of land adjacent to rivers, lakes, or oceans.
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Weep Hole
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An opening that allows for drainage of water
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Yield Rate
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Percentage result of annual cash income to the investment cost.
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Zoning
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Government's right to control use of property.
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