Real Estate 306 Midterm 1 Exam Questions and Answers with 100% Solutions | Rated A+
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Course
Real Estate
Institution
Real Estate
Real Estate 306 Midterm 1 Exam
Questions and Answers with 100%
Solutions | Rated A+
Real estate - physical asset
anything that can be owned or possessed; RIGHTS from owning property
if you have right of possession, you own real estate
profession and an industry
real estate as a physical asse...
anything that can be owned or possessed; RIGHTS from owning property
if you have right of possession, you own real estate
profession and an industry
real estate as a physical asset ✔✔- is the land and all permanent
attachments to the land and anything it is suitable for; ex. fixed structures
or parking garage potential
real estate as a bundle of rights ✔✔- it is the services/benefits real estate
provides ex. shelter, privacy etc
also have air rights, surface rights, mineral, oil and gas rights
can pick an choose sticks in the bundle of "ownership rights"
real property vs personal property ✔✔- real property = anything immovable,
ex land, home, anything attached to the land, permanent
,personal property = something that can be moved like RV or furniture
what are the three different markets in RE ✔✔- user markets
capital markets
property markets
user market ✔✔- competition among users for physical location and space.
competition determines the price of each land parcel
creates supply and demand
user market for physical real estate ✔✔- buyers receive the right to use
space
rental rates are determined by supply and demand
demand: individuals, households, and firms who require space for
consumption or production purposes
supply: real estate owners/operators who rent space to tenants
capital markets ✔✔- allocate financial resources among households and
firms requiring funds
ex. stocks, bonds, mortgage contracts... anything that will give a financial
return
provides equity and debt
, property markets ✔✔- determine required property specific investment
returns, values, etc
intersection of user and capital markets
other characteristics of real estate markets ✔✔- high transaction costs b/c
expensive to enter and exit market (time and $)
real estate is illiquid, fewer buyers
high asset value - debt financing is needed
long economic life
traditions - symbol of power, stability (people want to won homes, white
house)
capitalization rate ✔✔- ratio of property's annual net income from rental
operations to its value
net income/price of property
role of government on real estate ✔✔- local government = most influential,
property taxes, fees, construction restrictions
state government = least influential, sets requirements for local
governments
federal government = housing subsidies, income tax policies,
environmental policies
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