Real Estate Ch 1

Front 1

Property

Back 1

anything that can be owned or possessed;

can be a tangible asset or an intangible asset

Front 2

Tangible asset

Back 2

physical things

Front 3

Intangible assets

Back 3

nonphysical;

include contractual rights, financial claims, interests, patents, or trademarks

Front 4

Real estate term is used in 3 ways

Back 4

1. to identify the tangible assets of land and buildings

2. to denote the "bundle of rights" that are associated with the ownership and use of the physical assets

3. used when referring to the industry or business activities related to the acquisition, operation, and disposition of the physical assets

Front 5

Real estate (tangible)

Back 5

the land and permanent improvements on the land

Front 6

Improvements ON the land

Back 6

include any fixed structures such as buildings, fences, walls, and decks

Front 7

Improvements TO the land

Back 7

the components necessary to make the land suitable for building construction or other uses (aka infrastructure)

e.g. streets, walkways, drainage, electric, etc

Front 8

Land

Back 8

may include earth and improvements to the land

Front 9

Real property

Back 9

interchangeable with real estate.

Front 10

Personal property

Back 10

things that are movable and not permanently affixed to the land

e.g. motor home

Front 11

Market competition

Back 11

serves to distribute resources among the various users

Front 12

Real estate as a bundle of rights

Back 12

intangible rights associated with the ownership and use of the site and improvements

value of bundle is function of property's physical, locational, and legal characteristics

Front 13

2 primary characteristics of real estate assets

Back 13

Heterogeneity

Immobility

Front 14

RE is a Heterogeneous product

Back 14

each property has unique features

Front 15

RE is an immobile product

Back 15

vast majority of structures removed from the land are demolished rather than moved

Front 16

Real estate markets are Localized markets

Back 16

potential users of a property and competing sites generally lie within a short distance of each other

some users of commercial property types may not depend so heavily on access to a particular location

Front 17

Real estate markets are highly Segmented markets

Back 17

highly segmented due to the heterogeneous nature of products

e.g. res property types

also segmented by product price

commercial property markets segmented by both users and investors (e.g. investment grade properties)

localized nature of RE markets also contributes to segmentation

Front 18

Privately negotiated transactions with high transaction costs

Back 18

because real estate assets are highly heterogeneous and transaction details are not widely available, time and effort involved in searching, pricing, and evaluating alternatives is substantial

transaction costs include search costs (time, etc) and actual costs

Front 19

A market where tenants negotiate rent and other terms with property owners or their managers is referred to as a:

rental market, user market, housing market, or capital market

Back 19

user market

Front 20

User market

Back 20

the primary participants in user markets are the potential occupants, both owner occupants and tenants, or renters;

characterized by competition among users for physical locations and space

Front 21

Capital markets

Back 21

serve to allocate financial resources among households and firms requiring funds

Front 22

The market in which required rates of return on available investment opportunities are determined is referred to as the:

rental, user, housing, or capital market

Back 22

capital market

Front 23

What portion of households own their house?

Back 23

2/3

Front 24

Which asset category has the greatest aggregate market value:

-corporate equities
-mortgage debt
-gov't debt
-nongovernment real estate

Back 24

nongovernment real estate

Front 25

Storm water drainage systems are best described as:

-tangible assets
-improvements to the land
-improvements on the land
-intangible assets

Back 25

improvements to the land

Front 26

What is the single largest asset category in the portfolio of a typical US household?

Back 26

housing

Front 27

Real estate markets differ from other asset classes by having all of the following characteristics except:

-local market
-high transaction costs
-segmented market
-homogeneous product

Back 27

homogeneous product

Front 28

Which of the following is NOT important to the location of commercial properties?

-access to customers
-visibility
-access to schools
-availability of communications infrastructure

Back 28

access to schools is not important

Front 29

Which of the following attributes of a home are the most difficult to observe and value?

-land/site attributes
-structural attributes
-location attributes
-financing attributes

Back 29

location attributes (being on the other side of the street can drastically affect value)

Front 30

How many square feet are in an acre?

Back 30

43,650

Front 31

How many acres are in one square mile?

Back 31

640 acres in one square mile

Front 32

Classes of real estate

Back 32

Residential
Commercial
Industrial
Agricultural
Special purpose

Front 33

Residential class

Back 33

house, apartments, etc

Front 34

Commercial class

Back 34

retail properties, offices

Front 35

Industrial class

Back 35

manufacturing plants, storage

Front 36

Agricultural

Back 36

farms

Front 37

Special purpose

Back 37

if you can't classify it in residential, commercial, industrial, or agricultural

e.g. government properties, churches, museums, parks