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Real Estate Economics
Texas real estate part 2 2021
Terms in this set (147)
Highest and Best Use
The most probable use to which a property is suited that results in its highest value or highest returns to the land.
The desire for possession or ownership backed by the financial means to satisfy that need.
The capacity to satisfy human needs and desires.
The supply of property in relation to effective demand.
The relative ease with which ownership rights are transferred from one person to another.
The highest price in terms of money which a property will bring in competitive and open market and under all conditions required for a fair sale, i.e., the buyer and seller acting prudently, knowledgeably and neither affected by undue pressures.
The cost of replacing a structure completely destroyed by an insured hazard.
The current value for accounting purposes of an asset expressed as original cost plus capital additions minus accumulated depreciation.
A valuation placed upon a piece of property by a public authority as a basis for levying taxes on the property.
The price paid regardless of pressures, motives or intelligence.
Principle of Substitution
Affirms that the maximum value of a property tends to be set by the cost of acquiring an equally desirable and value substitute property, assuming no costly delay is encountered in making the substitution.
Supply and Demand
The principle that states the value of a property will increase if the supply decreases and the demand will either increase or remains constant, and visa versa.
Principle of conformity
holds that the maximum value is realized when a reasonable degree of homogeneity of improvements is present
principle of externalities
the influences outside of a property can have a positive or negative affect on its value
principle of anticpation
affirms that value is created by anticipated benefits to be derived in the future.
Principles of competition
holds that profits tend to breed competition and excess profits tend to breed ruinous completion
principle of change
This principle holds that it is the future not the past which is of prime importance in estimating value
part of a whole
a fraction with its numerator equal to or greater than its denominator
top number in fraction
bottom number in a fraction
the liquidation of financial obligation on an installment basis also recovery over a period of coast of value
Property Value = Property Value x % increase each year
FORMULA: FV = PV x (1+a) n
* FV - Future Value | PV - Present Value | a - appreciation rate | n - number of years
Calculate closing costs
Closing Costs = Loan Amount x points %
10,000 sq meters or 2.47 meters
one qualified by education training and experience who is hired to estimate the value of real and personal property based on experience judgment and facts
The highest price in terms of money which a property will bring in the competitive and open market and under all conditions required for a fair sell
Present worth of future benefits arising out of ownership to typical users/ investors
How much experience is needed to become a real estate appraiser trainee...?
How many hours of appraisal education is required to become an appraiser trainee...?
How many hours of appraisal education is required to become a general certified real estate appraiser...?
First step in appraisal proccess
state the problem
What is the second step in the appraisal process...?
list the data needed
3rd step in the appraisal process
Determine the highest and best use
A single value is derived from the three appraisal methods of determining value during the ............ process?
A typical residential appraisal report is issued on a...?
Uniform Residential Appraisal Report
The relative ease with which ownership rights are transferred from one person to another is known as...?
Market data approach
Comparing similar type properties which have recently sold to the subject property. Common for residential property
Value estimate is derived by estimating the replacement cost of the improvements deduction therefrom the estimated accrued depreciation then adding the market value of the land
1-find net annual income
2-Set an appropriate cap rate or present worth factor
3- capitalize the income dividing the net income by the cap rate
the cost of replacing the subject improvement with one that is the exact replica having the same quality of workmanship design and layout or cost to duplicate an asset
the cost to replace a structure with one having utility equivalent to that being appraised but constructed with modern material and according to current standards design and layout.
First step of appraisal of a property
Determine the value of the land as if it were vacant
Loss of value of property brought about by age physical deterioration or functional or economic obsolescense
impairment of condition loss in value brought about by wear and tear disintegration use and actions of the elements termed curable and incurable
the period over which a property will yield a return on the investment over and above the economic or ground rent due to land
a loss in value due to factors away from the subject property but adversely affecting the value of the subject property
A loss of value due to adverse factors from within the structure which affect the utility of the structure value and marketability
Gross rent multiplier
A number which times the gross income of a property produces an estimate of value of the property
Comparative Market Analysis
An analysis of the competition in the marketplace that a property will face upon sale attempts
written estimate of value by a real estate licensee
a person whose principal business in the originating financing closing selling and servicing of loans secured by the real property for institutional lenders on a contractual basis
a broker who arranges a mortgage loan between a lender and a borrower for a fee
A mortgage in which the scheduled payment will not amortize the loan over the mortgage term. A final payment is a balloon payment larger than the uniform payments is required
A mortgage that requires the mortgagor to pay interest only during the mortgage term with the principal due at the end of the term.
occurs when monthly installment payments are insufficient to pay the interest accruing on the principal balance so that the unpaid interest must be added to the principal due.
Negative amortization may occur in which of the following types of loans...?
Flexible payment loan
A term loan is typically used for which of the following...?
home improvement loans
A mortage securing a loan made by investors without governmental underwriting which is not FHA insured or VA guaranteed. The type customarily made by a bank or savings and loan association
Principal interest taxes and insurance
Loan to Value Ration LTV
the relationship between the amount of a mortage loan and the lenders opinion of the value of property pledged to secure payment of the loan
Private Mortgage Insurance PMI
Mortgage guaranty insurance available to conventional lenders on the first high risk portion of the loan
The interest earned by a bank on the money it has loaned
The amount of money the borrower or seller may pay the lender to get a mortgage at a stated interest rate. A point equal one percent of the loan
Loan Origination fee
The financing charge that a lender requires.
Adjustable Rate Mortage
A mortgage loan which bears interest at a rate subject to change during the term of the loan predetermined or otherwise.
Fund provided usually by the builder or seller to temporarily reduce the borrowers monthly principal and interest payment
Home equity loan
A loan against the equity in a home
Wrap Around Mortage
A financing device where by a lender assumes payments on existing trust deeds of a borrower and takes from the borrower a junior trust deed with a face value in an amount equal to the amount outstanding on the old trust deed and the additional amount of money borrowed.
A loan made to finance the actual construction or improvement on land. Funds are usually dispersed in increments as the construction progresses
Sales and leaseback
A financial arrangement where at the time of sale the seller retains occupancy by concurrently agreeing to lease the property from the purchase. The seller receives cash while the buyer is assured a tenant and a fixed return on buyers investment
The U.S Central bank is known as the...?
Which of the following purchases newly originated and seasoned agricultural loans from lenders...?
If an owner obtained an $80,000 loan on a $100,000 property, what LTV was provided by the lender...?
What do lenders require from all borrowers prior to issuing a loan...?
Once a bank make a loan to a borrower, the bank may sell that loan in which of the following markets...?
The right of the state to enact laws and enforce them for the order safety health morals and general welfare of the public.
Act of city or country authorities specifying type of use to which property may be put in specific areas
A planning and zoning term describing land not subject to conventional zoning to permit clustering of residences or other characteristics of the project which differ from normal zoning.
The illegal rezoning of a certain property in a zoned area to permit a different type of use than that authorized for the rest of the area.
A property use that doesn't' conform to current zoning requirements, but is allowed because the property was being used in that way before the present zoning ordinance was enacted.
Local governments use which of the of the following to help attract new businesses to an area...?
Tax increment reinvestment zones
The control and regulation of land use is accomplished through which of the following means
All of the above=
Public ownership of land
Public land use controls
A permitted deviation from specific requirements of a zoning ordinance because of the special hardship to a property owner
A systematic regulation of construction of buildings within a municipality established by ordinance or law.
Certificate of occupancy
A document issued by a local government agency after satisfactory inspection of a structure authorizing that the structure can be occupied
Limitations in the deed to a property that dictate certain uses that may or may not be made of the property
Delay or negligence is asserting ones legal rights
Fibrous mineral found in many building materials that when improperly distrubed can cause serious lung diseases.
A quality of some asbestos that cuases it to crumble allowing toxic particles to escape into the air and lodge in peoples lungs
A colorless, odorless, radioactive gas present in the soil that enters a home through small spaces and openings, foundation walls
Urea-Formaldehyde Foam Insulation (UFFI)
A type of foam containing formaldehyde a gaseous compound used for home insulating until the early 1980
An owner who enters into a lease agreement with a tenant a landlord
One who contracts to rent occupy and use property under a lease agreement a tenant
A contract between owner and tenant, setting forth conditions upon which tenant may occupy and use the property and the term of the occupancy. Sometimes used as an alternative to purchasing property outright, as a method of financing right to occupy and use real property.
A tenants right to occupy real estate during the term of the lease this is a personal property interest
Estate for years
An interest in land by virtue of a contract for the possession of them for a definite and limited period of time may be for a year or less. A lease may be said to be an estate for years.
A lease that automatically renews for successive periods unless terminated by either party. Also called estate from year to year
Tenancy at Will
A property tenure that can be terminated at any time by either the tenant or the owner. It exists without a contract or lease and is unspecific in duration or the Exchange of payment.
The Texas Property Code sets the maximum number of adults occupying an apartment at ........ the number of bedrooms in the apartment?
According to HUD what is a reasonable occupancy standard per bedroom
what do landlords want for security when people move in
A gross lease is a type of commercial lease where the landlord pays for the buildings property taxes insurance and maintenance
Lease requiring a lessee to pay charges against the property such as taxes, insurance and maintenance costs in addition to rental payments
Lease on a property the rental for which is determined by amount of business done by the lessee; usually a percentage of gross receipts from the business with provisions for a minimum rental
Lease which provides for a varying rental rate often based upon future determination sometimes rent is based upon result of periodical appraisals; used largely in long term leases
An agreement for the use of land only sometimes secured by improvements placed on the land by the user
Leases with a term of greater than ......... must be in writing to be enforceable?
A tenancy at sufferance may require a...?
If a tenant decides to rent out a second bedroom in their apartment to a new roommate, the roommate's lease is considered a/an...?
A tenant is also referred to as a...?
What is a lessor
A written document by which ownership of land is transfered from one party to another
Person who get land from a deed grand or other written instrument
Person who transfers to another the interest in the land
An age at which a person is able to handle their own affairs
Anything given or promised by a party to include another another to enter into a contract personal services or even love and affection. It may be a benefit conferred upon one party or a detriment suffered by the other.
The to have and to hold clause which may be found in a deed`
Power of attorney
legal document given to let an agent or attorney act on their behalf
General warranty deed
A deed used to convey real property which contains warranties of title and quiet possession and the grantor thus agrees to defend the premises against the lawful claims of third persons.
Special warranty deed
A deed in which the seller warrants or guarantees the title only against defects arising during he period of his or her tenure or ownership of the property
A deed to relinquish any interest in property which the granto may have without any warranty of title or interst
A promise by the grantor of real property that they are the owenr and will be responsible to the buyer if title is other than what they represent
The final and absolute transfer of a deed from a seller to a buyer in such a manner that it cannot be recalled by the seller.
The primary function of a ______ is to promote thrift and home ownership.
The minimum interest rate set by the federal reserve for lending to other banks is known as the
Federal reserve is in
Which of the following is a privately owned corporation that purchases FHA, VA, and conventional mortgages...?
A written notice of an obligation given by a corporation or government entity is known as a...?
The Federal Reserve regulates the flow of money and interest rates indirectly by controlling which of the following requirements for its member banks...?
The Texas Department of Housing and Community Affairs offers which of the following mortgage and housing assistance programs...?
The Texas First-Time Homebuyers Program
The Texas Bootstrap Loan Program
Veterans Housing Assistance Program
Which of the following is a U.S. government agency that purchases FHA and VA mortgages...?
A person to whom a debt is owed is known as a...?
Cash received in a tax-deferred exchange is known as
The cost to acquire a property, plus the cost of the physical improvements, minus the depreciation claimed as a tax deduction is equal to the...?
The new property after using an 1031 is a
A REIT is not subject to a corporate income tax if at least ......... of its income is distributed to shareholders?
A mortgage REIT's primarily source of income are from mortgage interest and...?
Mortage origination fee
A real estate security can include which of the following...?
Using the straight line depreciation method, residential property can be depreciated over how many years...?
A holdover tenancy cannot extend beyond how many months...?
A tenant's right to occupy real estate during the term of the lease is known as a...?
A valid lease must include which of the following...?
Which of the following is an acronym used to describe alternative risk management techniques...?
The CAN-SPAM Act applies to solicitation involving...?
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