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Fortune Academy Chapter 5
Pricing of Real Properties
31
Real Estate & Planning
Professional
08/06/2013

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Cards

Term
A real estate appraiser ___ value.
Definition
Estimates
Term
Appraisals are based on ___.
Definition
Type and difficulty of the appraisal.
Term
What are the 4 elements of value?
Definition
Scarcity
Transferability
Utility
Demand
Term
Scarcity
Definition
If too much property is available, the value will be less.
Term
Transferability
Definition
Must be able to transfer ownership from one party to another party.
Term
Utility
Definition
The property must be useful.
Term
Demand
Definition
There must be a demand for the property.
Term
What 4 forces affect value?
Definition
Physical
Economy
Political
Social
Term
Market Value
Definition
The highest price a property will bring.
Term
Market Price
Definition
The actual price of the property at time of sale.
Term
Competitive Market Analysis
Definition
A report where marketplace data is gathered using comparable properties.
Term
What are the 5 principles of value?
Definition
Substitution
Highest and best use
Supply and demand
Conformity
Contribution
Term
The formula for the Cost Approach
Definition
Value = Cost to Replace - Accrued Depreciation + Land
Term
Reproduction Cost
Definition
How much it would cost to create an exact duplicate of an identical property.
Term
Replacement Cost
Definition
How much it would cost to build a similar property.
Term
List and define 3 types of depreciation
Definition
Physical Depreciation - worn siding
Functional Obsolescence - dried up well
External Obsolescence - political upheaval
Term
Captialization Rate
Definition
The rate of return received on an investment. (Future Income)
Term
Income Approach
Definition
Assumes that the new income derived will control value. (Present Value)
Term
Summarize the Appraisal Process
Definition
1. State the problem
2. Preliminary survey
3. Gather, record and verify data
4. Analyze and interpret data
5. Apply approaches to value
6. Reconcile/corolate data and estimate value
Term
Real Estate Settlement Procedures Act (RESPA)
Definition
A federal disclosure law involving closing costs and fees
Term
RESPA requires lenders to disclose ___.
Definition
Estimated and actual settlement costs.
Term
A HUD booklet "Settlement Costs and You" and a good faith estimate of settlement costs must be given within ___.
Definition
3 days before loan application.
Term
RESPA requires settlements to be prepared on ___.
Definition
HUD 1 forms
Term
RESPA prohibits ___.
Definition
Kickbacks
Term
When should the purchaser have access to the actual costs involved and when do they get a copy of the settlement statement?
Definition
The day of closing
Term
List all seller expenses paid at closing.
Definition
Commission, deed preparation & stamps, existing liens & bank charges, satisfaction price, repairs agreed to & prorated expenses due.
Term
List normal buyer expenses paid at closing.
Definition
Title insurance, sales price, loan costs, attorney fees, credit report, appraisal, survey, insurances, recording fees, escrow deposits & reimbursement of prorated expenses.
Term
Escrow Items
Definition
Items paid on closing date by lender, like taxes.
Term
Prorated Items
Definition
Items that are reimbursed by either the buyer or seller, like HOA fees or utilities.
Term
What is the purpose of closing?
Definition
To ascertain that the title is marketable and insurable.
Term
What is the purpose of the closing statement?
Definition
To account for all cash received and disbursed on the day of closing.
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