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ISU - FIL 260 - Study Guide - Midterm

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ISU - FIL 260 - Study Guide - Midterm

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background image FIL 260 EXAM #1—Study Blue Physical Characteristics of Real Estate ­Immobility, fixed position (exception for mobile homes)  ­Lack of Consistency, such as different shapes and sizes ­Long life Economic Characteristics of Real Estate ­Scarcity ­Long­term investment ­high transaction costs ­Local economy ­Interest ratesinterest (down), Price (up); Interest (up), price (down) Characteristics of Real Estate Market ­Local market  have to find buyer locally ­Unorganized market ­Negotiation ­Inefficient market Factors that affect the demand of housing Price (­) Income (+) Population (+) Interest (­) Income (up), population (up), interest (down)demand (up) Real Estate Defined Land and the structures attached to it Land: anything on, above, or below your property Fixture: permanent attachments etc. window, carpet Eminent Domain
background image The government’s power to take private property for public use upon payment of just 
compensation
Police Power The government’s power to regulate the way private property is used to protect the 
health, safety, morals and general welfare of the public
Possessory Estate: Freehold vs. Non­Freehold Present interest Freehold: Indefinite Non­freehold: Definite Non­Possessory Estate: Reversion vs. Remainder Future interest Reversion: the future interest associated with a life estate held by the grantor Remainder: the future interest associated with a life estate held by someone other than 
the grantor
No immediate use and possession Easement A right given to another party by a land owner to use a property in a specified manner Not an estate in land—personal property Right to use the land owned by another person No right to possess Easement Appurtenant: an easement with clearly identifiable dominant and servient 
estates
Easement in Gross: an easement with only a servient estate Right of Survivorship The right of surviving joint owners to automatically divide the share owned by a 
deceased owner
Joint Tenancy Joint ownership in which all owners have an equal, but undivided, interest in a property Tenancy by the Entirety
background image A form of concurrent estate in which a husband and wife can own property jointly Husband and wife only No creditor legal claim No freely sever interest Tenancy in Common A form of concurrent estate in which each owner has an undivided interest in the 
property
No equal interest among owners No right of survivorship Freely transferable and inheritable Community Property Theory under which all property acquired during a marriage is considered to be equally 
owned by the husband and the wife, regardless of the financial contribution each spouse 
actually made to the property’s acquisition
During marriage and through joint efforts Separate property Property Tax Used to contribute to local public schools, local street improvements, local parks, local 
police and fire protections, general government
Ad Valorem Tax: a tax levied as a percentage of the value of the taxed item Budget needed / Total assessment value Tax bill = [(AV X multiplier) – Exemption] X Rate Township multiplier: AV = 1/3 of MV Sales Contract A contract providing for the transfer of property Bilateral: Promise ­­­­­­ Promise  Offer and acceptance, Not convey legal title, Earnest money deposit, Closing date, 
Personal property included, Contingencies
Ownership type: no indication, fee simple
background image Listing Contract Contract of employment Contract period, asking price, listing broker’s reputation, commission (ready, willing, 
able)
Unilateral: Promise ­­­­­­­ Act Installment Land Contract A contract that establishes an obligation to transfer title from a seller to buyer at some 
future date based on an agreed­upon payment schedule
Contract for deed, seller retains legal title as security, buyer P and I payment, title upon 
final payments, take possession, absolute control of property, freely transferable and 
inheritable
Principle of Anticipation The anticipated utility or income that will accrued to the property owner in the future MV = f(anticipated future CF) Principle of Contribution The principle that the value of a component part of a property depends on the amount it 
contributes to value of the whole 
The Cost Approach of Appraisal A method used to estimate value by implementing the following steps: (1) Estimate the value of the site as though it were vacant
(2) Estimate the cost to produce the improvements
(3) Subtract accrued depreciation
(4) Add site value to the estimated depreciated cost of the improvements
V = Land + Building Physical Depreciation Loss in value that occurs from ordinary wear and tear, vandalism, or neglect Functional Depreciation Loss in value that occurs because a property has less utility or ability to generate income
than a new property designed for the same use
Internal problem within a structure bad design

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School: Illinois State University
Department: Finance
Course: Real Estate
Term: Fall 2015
Tags: Introduction and RealEstate
Name: Exam 1 Study Guide
Description: Weeks 1-4 material is covered in this study guide and on the exam
Uploaded: 03/20/2018
16 Pages 59 Views 47 Unlocks
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