Chapters 1-4 Flashcards
What is Real Property?
All interest, Benefits and RIGHTS inherent in the ownership of physical real estate
Define Real Estate
An identified parcel or tract of land including any improvements
What are the 6 items in the “Bundle of Rights”?
G.L.U.E.S.E.
Give Property Away Lease Use Enter Property Sell Exercise all or none of the above
Define Fee Simple
Occupied by the Owner -Most Complete Form of Ownership
Define Lease Fee:
Owner- Lease to Tenant
Define Leasehold:
Tenant- Tenant’s position - a tenant can create value with a beneficial lease
4 Powers of Governement
P.E.E.T.
1- Police Power
2-Eminent Domain
3-Escheat
4-Taxation
What is Eminent Domain?
Condemnation - Government takes property for good of the community
Give 2 examples of police power:
Zoning
Building Codes
What is Escheat?
Gov. take property with death of owner with no heirs
What is Real Property?
Land and building (and attachments)
What is Personal Property? Give Example
Moveable items (Not considered RE)
- Fridge
- Trampoline
- Portable Book Shelves
Give an example of an intangible asset:
Business Enterprise, copyright, trademark, IP
Is a Fixture Real Property or Personal Property?
Real Property
What is a Fixture? Give examples
Fixture: Any object permanently attached to a property by way of bolts, screws, nails, glue, cement etc. Ex: Chandeliers, ceiling fans, window
4 Tests of Fixture:
1- Manner of Attachment
2-Adaptation- Character of item and adaptation to the RE
3-Intent - Intent of party who attached item
4-Mutual Agreement- Agreement of both Parties
What is a trade fixture? Is it real or personal property?
Personal Property
Chattel - Example Jewelry cabinets commercial lease
Name 5 types of RE assets:
1- Residential 2-Commercial 3- Agricultural 4-Industrial 5-Special Purpose
Name 5 types of Value:
Market Value Use Value - for specific user or purpose Investment Value - for spec. investor based on returns Assessed Value- Taxable value Business Value- Intangible assets
The “act” or process of developing an opinion of value
Appraisal
4 Concepts of Land
1- Geographic and Environmental
2-Legal
3-Economic
4-Social
Geographic and Environmental Concept of Land states that land is:
Unique Immobile Durable Finite Useful Influenced by: climate, trends, etc.
Legal concept of land includes:
- Pyramid “to the sky and depths”
- Easements
- Access Regulations
- Water and Mineral
- Zoning and Other Restrictions
- Recording and Conveying Titles
Economic Concept of Land States that:
Land is valuable, source of wealth, and has value
The social concept of land includes:
How is land used?
-Zoning - govt. has right to decide use.
Private
Concurrent
Legal Entities
Forms of Real Property Ownership
Four Agents of Production:
Land- The cost of acquiring the land
Labor- The physical and intellectual contribution
Capital- Equipment, buildings and infrastructure
Entrepreneurial Coordination- Profit above the return of equity
Utility
Scarcity
Desire
Effective Purchasing Power
Bonus: What do these create?
Factors of Value
Bonus: Create Demand
Define Utility:
Ability of a product to satisfy a human want, need or desire.
Define Scarcity:
Supply relative to demand
Define Desire:
Wish to satisfy human needs
Define Effective Purchasing Power:
Ability of participate in the market
What is the difference between Price, Cost, and Value?
Price: Amount being paid in exchange
Cost: Total dollar expenditure for an improvement (direct or indirect)
Value: Monetary worth of a property to buyers and sellers at given time. Present worth of future benefit
Fundamental Appraisal Concepts
Anticipation Change Supply & Demand Competition Substitution Opportunity Cost Balance Contribution Surplus Productivity Conformity Externalities
What is USPAP?
USPAP: Uniform Standards of Professional Appraisal Practice
Are Appraisers advocates or a disinterested third party?
Disinterested third party
What are the 8 Steps in Valuation?
1- Identification of the problem 2-Scope of Work Determination 3-Data Collection and Property Description 4-Data Analysis 5-Land Value Opinion 6-Application of the Approaches to Value 7-Reconciliation of Value Indications and Final Opinion of Value 8-Report of Defined Value
How to Identify Problem in Valuation?
Identify: Client, Use of Appraisal, Purpose, Date of Valuation, Property Characteristics
How to Determine Scope of Work in Valuation?
What are you asked to do?
Required detail?
What Data Used in Valuation?
Market Area Data
Subject Property Data
Comparable Property Data
How to complete Data Analysis in Valuation?
Market Analysis
Highest and best use Analysis
What is Value Land Opinion in Valuation?
Separated land value from total property value
3 Application of Approaches to Value
Cost Approach
Sales Comparison Approach
Income Capitalization Approach
What is Reconciliation and Conclusions in relation to Valuation?
Reconciliation, Explain data analysed, methods used, and reasoning behind value conclusion.
Give each valuation method consideration and weight each approach accordingly
