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97 Cards in this Set
- Front
- Back
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What is a market data/direct comparison market?
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Estimate by comparing subject property: recently sold, closest to being most accurate to value, used mostly for single. family residences.
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What are the four principal considerations in making adjustments to comparable?
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Date of sale - should have been in last year, location - must be the same, physical features - amenities similar or make adjustments to comparable, terms and conditions and sale - "Comp" should have been financed through lender.
Note: home sold through seller financing will go for more, cash will sell for less. |
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What is a arm's - length - transfer?
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Neither party is related nor will the relationship of parties have an effect on price offered or contract consideration.
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What is a cost approach to value?
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Between two similar properties the one with lower asking price will sell first, special use properties i.e., hospitals, churches, libraries, museums and new construction.
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What do you need to consider when estimating value of land?
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Use market data approach find comparable with same zoning, size, traffic count, size, etc... Estimate the value of land as if it were vacant.
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What do I need to consider when estimating current cost of improvements?
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Use replacement cost or reproduction cost by using square-foot method, unit-in-place method, quantity survey method, or index method.
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What is a replacement cost?
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Cost to construct a building that has same utility (use) as subject property; most frequently used.
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What is reproduction cost?
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Exact duplicate of current improvements - used in special cases.
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What is square foot method?
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Cost per square foot of recently built.
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What is unit-in-place method?
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Cost of individual component parts installed.
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What is quantity-survey-method?
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The amount of raw material needed to replace subject structure.
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What is index method?
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Factor representing percentage of increase in construction costs.
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Does land depreciate?
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NO
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What is income approach?
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Based on present value of future income; used to estimate value on incoming producing property. Examples: rentals
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What is gross rent multiplier (GRM)?
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Used to appraise single family homes or duplexes as a substitute for the income approach. Value/gross annual income = GRM
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What is gross income multiplier (GIM)?
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Used when a property's income also comes for non-rental sources. Example: crops, concessions etc... Value/Gross annual income = GIM
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What is capitalization?
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Recapture of the original investment from an improvement and to give an investor an acceptable rate of return.
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What is a cap rate?
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It measures the risk involved in an investment. Higher the cap rate % for a risky investment.
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What is used to make appropriate listing price recommendations for the seller?
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Market value, market price and market analysis.
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What is market value?
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Most probable price a property should bring in a competitive open market.
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What is market price?
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What property actually sells for.
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What is an market analysis?
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Provides price range showing highest price property could be realistically listed for.
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What is an appraisal?
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It is an estimate or opinion of value.
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What is value?
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Present worth of future benefits that arise from the ownership of real property.
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What four characteristics must be present for value to exist?
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Demand, Utility, Scarcity and Transferability.
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What is demand of value?
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Need or desire backed by the financial means to satisfy the desire.
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What is Utility of value?
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Used to satisfy human wants and desires.
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What is scarcity of value?
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Finite supply.
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What is transferability of value?
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relative ease with which ownership can be transferred.
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What is reconciliation/correlation?
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Art of analyzing and a definite statement of usually in form of a value estimate of property by appraiser.
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What is highest and best use?
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Most profitable use at present or at some time in the future.
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What is Substitution?
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Maximum value set by cost of equally desirable substitute property.
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What is supply and demand?
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Value increase if decreases, opposite is true also.
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What is conformity?
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Maximum value realized if land use conforms to neighborhood standards.
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What is regression and progression?
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When worth of a better property is lowered by lesser quality properties - principal of regression applies. When lesser property increases in value due to being among better properties - principal of progression applies.
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What is anticipation?
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Value affected by some anticipated future benefit or detriment to property.
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What is plottage?
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When merging of adjacent lots to a single land use of higher total value.
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What is contribution?
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the value each component part Contributes to the overall value of the improvement? Example:
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What is Increasing and diminishing returns?
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If improvement increases return on investment - law of increasing returns. If improvements do not produce increase in return or value - law of diminishing return applies.
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What is competition?
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Excess profits attract competition.
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What is change?
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No condition remains constant and the change occurring affects value.
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What is a fixture in the context of real property?
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Items that were once personal property but are permanently affixed to and become a part of real estate.
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What are the legal tests of a fixture?
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Method, adaptation, relationship, intention and agreement
(MARIA) |
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What is a trade fixture (chattel)?
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Article owned my a tenant and attached to a rented space or building for use in conducting a business; may be removed, if done prior to lease expiration.
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What is accession?
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Ownership of trade fixture reverts to landlord because tenant did not remove fixture prior to lease expiration.
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What is a partnership?
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tow or more people in business to share profits and loss.
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What are general partners?
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All share in management and held personally liable for all loss or obligations.
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What is a limited partner?
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Partners are liable for loss only to extent of investment; includes general partners responsible for management and all financial obligations.
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What is a trust?
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method of holding title to real estates.
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What is a trustor?
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Originator of trust.
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What is a trustee?
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Owner of property for beneficiary will hold title for time period specified by trustor; manages property in the best interest of the beneficiary (bank); has a fiduciary responsibility.
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What is a beneficiary?
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One who benefits from the trust arrangement; named by trustor in origination of the government.
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What is a testamentary trust?
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Created by will; takes effect after death of trustor.
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What is a living trust?
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Created by instrument during life of trustor.
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What is a land trust?
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Created to control real property by beneficiary; trustor and most often the same person, but beneficiary is not of public record; trustee has ownership interest and manages property as beneficiary directs.
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What is a syndicates?
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Joining together of two or more people or firms in order to make and operate a real estate investment. Examples: REIT, partnerships, corporation, etc..
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What is a joint venture?
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??????
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What is a metes and bounds?
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Point of beginning (POB), begin and end at POB, fully enclosed, uses large fixed objects to establish boundaries. Example highway, trees etc... and remember the monument takes precedence.
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What is rectangular survey?
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Intersecting lines - principal meridians and base lines.
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What directions do meridians run?
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North and south.
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What directions do base lines run?
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East and west - like latitudes.
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What are range lines?
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six-miles wide strips of land running north and south parallel to baselines.
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What are township lines?
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Six mile wide strips of land running east and west parallel to base lines.
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What is a township squares?
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They are formed by intersecting township and range lines; six mile square; contain 36 square miles.
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What is a section?
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36 in each township; each section contains one mile square or 640 acres; each acre contains 43,560 square feet, 5,280 lineal feet in a mile.
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What is a lot and block?
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It is the recorded plat of subdivision, surveyed by licensed surveyor, and gives lot, block, subdivision, city, county, and state in legal description; actual drawing of lot provided by plat map.
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What is a feudal system?
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Ownership by overlords and kings.
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What is allodial system?
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Individual has property ownership rights.
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What is freehold?
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Ownership for a lifetime or forever.
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What is nonfreehold?
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Ownership ends at a determined time; a lease.
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What are the duties of an agent (salesperson) with a principal (client)?
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Care, Obedience, Accounting, Loyalty, and Disclosure.
(COALD) |
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What is a fiduciary relationship?
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It is a relationship between the agent and principal of trust and confidence.
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What does care mean in a agency relationship?
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Care is when broker is responsible for any loss resulting from negligence or carelessness.
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What does obedience mean in a agency relationship?
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Obedience is an obligation to act in good faith and conformit with principal's lawful instructions; may disobey in emergency situations when in principal's best interest.
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What does Accounting mean in an agency relationship?
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Accounting broker must keep accurate records of all funds received; illegal to commingle.
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What does loyalty mean in an agency relationship?
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Loyalty to principal's interest always comes before agents; agent must not disclose any item that would affect principal's bargaining position; must act without self-interest.
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What does disclosure mean in an agency relationship?
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Agent must keep principal fully informed at all times of any information that may affect transaction.
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What is an agency?
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Needs agents, brokerage and brokers.
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What is an agent?
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A person who represents a principal in dealings with third parties.
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What is a brokerage?
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It brings buyers and sellers together in the marketplace.
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What is a broker?
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Is hired by the principal to become agent; principal can be buyer, seller, lessee, lessor, or anyone contracting with the broker.
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What is a general (universal) agent?
(Common Law Agent) |
Represents principal in specific range of matters; has authority to enter into contracts within scope of authority; continuity important characteristic; created by general power of attorney or management contract; property manager is a general agent; considered to be a "Common Law Agent" in the state of Nebraska.
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What is a special agent?
(Limited Agent) |
represents principal in one specific transaction or business activity only; cannot enter into a contractual agreement on behalf of principal; typically created my listing agreement; listing brokerage firms are a special agent; considered to be a "Limited Agent" in the state of Nebraska.
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What is an express agreement?
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Stated in words, either written or oral; generally a listing agreement.
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What is an implied or ostensible agency?
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Demonstrated by acts and conducts of parties, not written; often seen in agent-buyer relationships.
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What is ratification?
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It is acceptance of the agent's conduct by the principal can establish agency.
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What is estoppel?
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Creates an agency if a third party relies on a principal's representations; principal cannot deny agency relationship once created.
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What is License Law for net proceed estimation?
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Any time prior to offer being accepted, countered or presented, seller and buyer must be notified they will be expected to pay certain closing costs, such as discount points and approximate amount; document shall be signed by buyer and seller and kept in broker's records for five years.
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What is an open listing for the seller?
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Seller will employ any number of brokers; pays fee to selling broker only; may sell at reduced price without aid of broker and pay no fee at all.
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What is an exclusive agency listing for the seller?
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One broker (brokerage firm) only authorized to sell; seller may sell without aid of broker and pay no fee.
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What is an exclusive right to sell listing for the seller?
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One broker (brokerage firm) authorized to sell; commission paid regardless of who sells.
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What is a net listing regarding the seller?
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Based on amount of money seller receives if property sells; upon sale seller receives only net amount for which property was listed; highly discouraged in state of Nebraska.
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Why is a net listing not encouraged in the state of Nebraska?
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Because it can create a conflict of interest between the broker's fiduciary responsibility to the seller and the broker's profit motive, it is illegal in many states and discouraged in others.
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What is a multiple listing service (MLS)?
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Authority given to listing broker to distribute listing to other broker members; listing broker receives full commission, makes agreed upon split to selling brokerage firm.
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What does improving marketability of property mean?
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Agents should inform seller (principal) of specific areas potential buyers (customers) will assess before purchasing. Examples: cleaning, fresh paint etc...
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What is license law about advertising?
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Prohibited from placing "blind ads", those which do not identify the broker as the advertiser. Broker company needs to be placed in ALL ads.
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According to license law what records need to be kept for each house that sells?
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Surveys, maps, contracts, trust account records, etc....
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