Value Of Real Estate
Literature Review 3
Real property is defined as the benefits, rights, interests and encumbrances that are inherent in the ownership of a physically present real estate. Real estate is taken to be the land along with all the improvements that maybe permanently affixed to that land.
Real estate valuation is hence a means of providing quantitative measure of all the liabilities and benefits associated with ownership of the real estate. Different market players seek to carry out real estate valuation. These include real estate agents, assessors, appraisers, brokers, investors, property developers, lenders, mortgage lenders, market analysts and other consultants.
Practitioners and researchers who have studied the real estate market, perceive it to be a series of localized submarkets. Every micro market is perceived to have an impact on all properties that trade in that particular market. Evidence from empirical research does support this segmented market hypothesis. However not much clarity exists as to whether this segmented market perspective leads to a more efficient estimate of real estate value.
Real estate, it is often …show more content…
Extensive debate can be found in real estate appraisal literature over the definition of value. While real estate appraisers aim to measure the market value of the estate, lenders are concerned with the value of the property that can be extracted at fire sale prices since the property acts as security for repayment against a mortgage. According to Bruggeman and Fisher (2005) for lenders, the value of the asset must remain sufficiently high over a period of time, usually the debt period, to repay the outstanding loan in case a default occurs. For a home buyer the attempt to value property is to understand the drivers of property appreciation to ensure that the asset is competitively