Real estate principles a value approach (5e) part 2

www.downloadslide.com Chapter 12 PART FIVE Real Estate Brokerage and Listing Contracts LEARNING OBJECTIVES After reading this chapter, you will be able to: Describe the brokerage function State three reasons sellers use brokers Explain the real estate licensing process Explain the difference between licensing and industry designations Explain how commission rates are determined List and describe three types of listing contracts Describe three types of agency relationships in real estate brokerage List at least three protective provisions each for a property owner and broker that should be included in a listing contract List the ways that a listing contract can be terminated OUTLINE Introduction: Brokerage—The Best-Known Type of Real Estate Business Real Estate Brokers as Market Facilitators Economic Rationale for Employing a Broker Law of Agency Types of Agents Fiduciary Responsibilities Real Estate Agents Problems in Real Estate Agency Relationships and Disclosures Transaction Brokers Licensing of Real Estate Brokers and Salespersons Brokerage Licensing Administration How to Obtain a Real Estate License License Law Infractions Designations in Real Estate Sales and Brokerage The Marketing Function Market Segmentation and Specialization Commercial Brokerage Residential Brokerage International Aspects of Brokerage Listing Contracts Types of Listing Contracts Open Listing Exclusive Agency Listing Exclusive Right of Sale Listing Innovations in Brokerage Buyer Brokerage New Listing Services and “Discount” Brokerage Listing Contract Provisions Termination of a Listing Contract Splitting the Commission www.downloadslide.com 306 Part 5  Brokering and Closing the Transaction Introduction: Brokerage—The Best-Known Type of Real Estate Business Many people think of real estate brokerage as the real estate business Although we take a much broader view of real estate, we agree that brokerage is one of the largest and most visible parts of the real estate business Also, most people are more apt to come in contact with real estate brokers or salespeople than other real estate professionals Real estate brokerage also tends to be better known than other real estate businesses because it is easier to enter Educational requirements are not extensive, and capital requirements are not as high as in other businesses; a small office, a telephone, a computer, and a car may be the only requirements Although many people enter the business, many also leave it; turnover is high Yet real estate brokerage is a demanding occupation for those who would succeed It requires a great deal of knowledge, skill, and effort It also can be quite rewarding monetarily and personally As with any other business or profession, however, the price of success is preparation, dedication to the welfare of customers, and hard work ✓ Concept Check 12.1 www.realtor.org Home page of the National ­Association of Realtors (NAR), the umbrella organization for the real estate brokerage industry, and more Name three conditions that represent the “price of success” in real estate brokerage Real Estate Brokers as Market Facilitators Real estate brokers are intermediaries They are the catalysts of real estate transactions; they help make markets work by bringing buyers and sellers together physically and emotionally to create sales and purchases Without their services, it would be more difficult and costly to buy and sell properties, and real estate values—at least in some markets—would undoubtedly be lower The buyers who value the property most would be less likely to find it For this service, brokers are paid a fee, usually called a commission Commissions are typically paid by sellers, but they may be paid by buyers or—in some unusual situations— by both sellers and buyers ✓ Concept Check 12.2 Without real estate brokers, real estate values would be lower Explain this statement Commissions usually are determined as a percentage of the gross sale price, though other arrangements are possible For example, an owner and a broker may agree to a net listing, whereby the seller is assured a certain fixed net price for the property and the broker is allowed to retain any amount of the actual sales price above that figure.1 Economic Rationale for Employing a Broker Brokers are employed to sell properties because they can offer expertise and efficiency Brokers have specialized knowledge of the real estate market and have developed expertise in selling properties Furthermore, they spend time and effort in finding buyers for listed properties Successful brokers have knowledge in the following areas: ∙ ∙ Prices and terms of recent market transactions for similar properties Marketing procedures that have been successful in the past Because the net listing agreement encourages the broker to be less than candid to the seller, it is viewed by some as unethical, and may be prohibited in some places www.downloadslide.com 307 Chapter 12  Real Estate Brokerage and Listing Contracts ∙ ∙ ∙ ∙ Legal obligations of buyers and sellers Similar properties, prices, and terms currently listed for sale Needs of prospective buyers who seek out brokerage firms as sources of properties Procedures that buyers and sellers should follow in consummating a transaction (e.g., how to obtain a title search, financing, insurance, utility services, and the like) While some property owners attempt to sell their properties themselves to avoid a brokerage commission, they often find they are ill equipped for this task, and they may end up with less cash than if they had employed a broker Consider the two alternative transactions in Exhibit 12-1 for the same property—one without and the other with a broker The gain to the owner by using a broker is the result of a number of factors While some owners may believe otherwise, buyers tend to negotiate prices downward by at least a portion of the commission when they know a broker is not involved Furthermore, the asking price may be lower to begin with because a seller who does not employ a broker has access to fewer prospective buyers And sellers may waste time with unqualified buyers In other words, an owner-seller must usually rely on a “thinner” market than a broker, and the selling time may be longer ✓ Concept Check 12.3 Name five areas in which an expert real estate broker has special knowledge Careful readers of Exhibit 12-1 may agree with these points, but may also realize that by ignoring his or her time in the calculation, the owner would be ahead not to use a broker But even though the owner’s time is not a cash cost, it normally should be counted, since he or she must typically take time off from a job or give up other valuable or pleasurable activities Owners also subject themselves to greater legal risks, financial risks, and potential frustration because they are less aware of the pitfalls of selling property than brokers who specialize in this activity The net result is that sellers who employ brokers often end up better economically than sellers who not employ brokers If this were not so, most owners would not use brokers, and the number of brokerage firms would decline dramatically ✓ Concept Check 12.4 What is a cost of selling a property that tends to be overlooked by prospective “for-sale-by-owners”? Exhibit 12-1  Transactions with and without a Real Estate Broker Price Owner’s marketing costs Time of owner (60 hrs @ $50 per hr.) Commission (6 1/2%) Proceeds to owner $1,500 3,000 Without Broker With Broker $190,000 $200,000 — — 4,500 — 13,000 $185,500 $188,000 www.downloadslide.com 308 Part 5  Brokering and Closing the Transaction Law of Agency Real estate brokers and salespersons traditionally have operated under the law of agency, which gives a broker or salesperson the right to act for a principal in trying to buy or sell a property In acting for another person, brokers automatically fell into the category of agents, which means the broker must “stand in the shoes” of the principal Thus, a broker must look out for the best interests of the principal and can nothing to compromise a principal’s interests, position, or bargaining power In most states, statutory law has intervened recently to alter the agency status of brokers, as we explain later To understand the changes, it is necessary to first understand agency ✓ Concept Check 12.5 An agent’s relationship to a principal is characterized by what phrase? Types of Agents In general, agency relationships can have three different breadths The broadest scope of authority is the universal agent, to whom a principal delegates the power to act in all matters that can be delegated in place of the principal A general agent is delegated by the principal to act within the confines of a business or employment relationship An insurance agent, for example, may be a general agent of the insurance company if the agent can sign contracts that bind the company, supervise employees of the company, and in other ways carry out the business of the company Similarly, a property manager is a general agent if he or she can rent apartments, collect rents, handle tenant relations, supervise maintenance, and perform accounting functions, but is not an employee of the property owner Further, as discussed later, a salesperson in a real estate brokerage firm is a general agent of the firm’s owning broker A special agent is authorized by the principal to handle only a specific business transaction or to perform only a specific function Under traditional agency, the real estate broker acts in the capacity of a special agent in representing the buyer or the seller to purchase or dispose of a property Fiduciary Responsibilities Agents have a fiduciary relationship with their principals This relationship, by legal tradition, carries several special responsibilities As fiduciaries, agents must observe the following duties: Confidentiality—Never betray confidential information about their principals, their financial status, or their motivations Obedience—Follow the instructions of their principal to the limits of what is legal If agents regard the orders of the principal to be legal but unethical, they should withdraw from the relationship rather than disobey Accounting—Keep the principal informed about financial aspects of their assignment Loyalty—Never subordinate the best interest of their principal to the interests of others Disclosure—Be completely open and honest with their principals Skill and Care—Represent the interests of their principals to the best of their ability—in the same way they would represent themselves, acquiring and applying the necessary skills, knowledge, and information about relevant laws and regulations, the market, and subject property.2 It may be helpful to note that the first letter of the duties spell “COALDS.” www.downloadslide.com Chapter 12  Real Estate Brokerage and Listing Contracts 309 A principal in a fiduciary relationship also has duties These are to be open, honest, and fair with the agent This implies also that the principal will cooperate with the agent in providing information about the property (e.g., repair and expense records and defects) when requested by the agent When the agent has successfully completed the task assigned (the sale of the property), the agent is entitled to prompt payment for services rendered ✓ Concept Check 12.6 The broker traditionally has what kind of relationship to the principal? What are the six duties owed the principal? Real Estate Agents www.realtor.org/­ mempolweb.nsf/pages/ code NAR code of ethics An agency relationship traditionally was created between a seller and a broker when both parties agreed to a listing contract Such a contract may be written or oral, and it establishes the rights and duties of each party In most listing contracts the sellers agree to make the properties available for purchase at a specified price for a specified period of time (e.g., four months) They also agree to pay the broker a specified fee or a certain percentage of the selling price when the broker finds a buyer who is “ready, willing, and able” to purchase the property, or upon closing of the transaction Brokers usually agree to use their best efforts to try to sell the property on terms acceptable to the sellers (A detailed listing contract, Exhibit 12-6, is discussed later.) ✓ Concept Check 12.7 What are the three basic types of agency relationships? Which of these refers to a broker’s relationship to a principal? An agency relationship also can exist between a buyer and a broker In a buyer agency agreement a broker agrees to use his or her best efforts to find properties meeting the requirements of the buyer The buyer agrees to pay the broker a commission or a fee upon consummating a purchase or, more commonly, to permit the broker to share a commission paid to the seller’s broker Salespersons must be affiliated with a broker, from whom they derive their agency status As general agents of their broker, they assume all of the special agency obligations that the broker has created, thus becoming special agents to any of the broker’s principals This type of agency, whether with a seller or a buyer, has come to be called single agency Subagency.  Modern real estate brokerage normally relies on a multiple listing service (MLS) through which brokers have access to each other’s listings Brokers who are members of the MLS can make their listings available to be sold by other broker members, and the commission is split between them If the listing broker is an agent, then it becomes a subagency arrangement, and the chain of agency becomes rather long, but clear The listing salesperson represents the listing broker, and both become special agents to the seller-­ principal A selling broker and any affiliated salespersons traditionally become subagents of the listing broker and thus are special agents of the seller as well So every person in this chain is a special agent to the seller, and owes the same level of loyalty, confidentiality, trust, obedience, disclosure, accounting, care, skill, and due diligence to the seller-principal Dual Agency.  Another agency relationship allowable in some states is dual agency In these situations the broker is an agent of both a seller and a buyer, and the broker owes equal loyalty to both A dual agency must be disclosed to all parties in the transaction, and both principals must give their informed written consent While the broker owes equal www.downloadslide.com 310 Part 5  Brokering and Closing the Transaction loyalty to both parties, it cannot be undivided loyalty For example, a dual agency broker cannot inform the seller that the buyer will pay more than the price stated in the written offer or that the seller or buyer will accept financing terms other than those offered Similarly, the broker cannot reveal to the buyer that the seller will accept a price lower than the listing price, unless instructed in writing to so Dual agency is inherently problematic because of the divided loyalty, and views on it are polar While California, for example, embraces it, Florida, on the other hand, prohibits it ✓ Concept Check 12.8 What is the name of a very complicated agency relationship that arises when one firm represents both seller and buyer? Comparison of Traditional Agency Relationships.  A variety of agency relationships for real estate brokerage are compared in Exhibit 12-2 The first case, traditional brokerage, involves a seller-principal listing with a broker (through a salesperson) Through MLS and subagency, the resulting special agency relationship runs through the seller-broker all the way to the salesperson in direct contact with the buyer However, the relationship between that salesperson and the buyer is “arm’s length.” Thus, the buyer is simply a customer of the seller-broker firm rather than a client In the second case, where there is both a seller agency and a buyer agency, two special agency relationships confront each other at the interface between the brokers The two brokerage firms can deal at arm’s length in the transaction Until recently, however, transactions involving both seller-principal and buyer-principal had special difficulties MLS membership generally required subagency Therefore, the buyer’s broker dealing with an MLS listing was, by contract, also a subagent of the seller and unavoidably a dual agent (the third case in Exhibit 12-2) To avoid this problem, the requirement of subagency generally has been dropped from MLS membership ✓ Concept Check 12.9 In traditional MLS property listings, the broker selling a listing traditionally was an agent of the seller, in spite of all appearances otherwise, by virtue of what kind of required agency relationship? The fourth case represents the basic example of dual agency A single broker has both the listing contract with the seller and a buyer agency agreement with the purchaser As noted later, this is a common situation, often treated through the use of designated agents, one for the buyer and one for the seller The fifth case, transaction brokerage, represents recent widespread efforts to replace the classical agency relationship Some background on the problems of agency is helpful to understand it ✓ Concept Check 12.10 Brokerage firms are increasingly faced with an unintended internal dual agency problem because of the increase in what practice? Problems in Real Estate Agency Relationships and Disclosures The nature of the real estate brokerage business tends to confuse and stress the traditional agency relationships described above For example, many thoughtful observers have questioned whether it is possible for a broker serving as a dual agent to simultaneously “stand in the shoes” of both a buyer and a seller Yet the occurrence of this conflict is www.downloadslide.com 311 Chapter 12  Real Estate Brokerage and Listing Contracts Exhibit 12-2  Types of Brokerage Relationships Dual Agency Traditional Brokerage Buyer Brokerage Through Subagency Through Single Broker Transactional Brokerage Seller-Principal Seller-Principal Seller-Principal Seller-Principal Seller Special Agency Special Agency Special Agency Special Agency Listing Salesperson Listing Salesperson Listing Salesperson Listing Broker Listing Broker Listing Broker Subagency “Arm's Length” Selling Broker Selling Salesperson “Arm's Length” Buyer Subagency Listing Salesperson Buyer Salesperson Dual Agency Listing and Selling Broker Nonfiduciary Selling Broker Dual Agency Buyer Salesperson Listing Salesperson Listing Broker Buyer Broker Buyer Broker Nonfiduciary Selling Salesperson Special Agency Special Agency Special Agency Buyer-Principal Buyer-Principal Buyer-Principal Selling Salesperson Nonfiduciary Buyer inherent with the practice of buyer brokerage To mitigate the concern about dual agency, virtually every state has imposed strict requirements of disclosure and written consent for the buyers and a sellers involved Many observers still question whether this is sufficient protection since the nature of the problem is subtle and challenging to understand One solution that a number of states have resorted to in dual agency is to allow designated agents When a brokerage firm is serving both a buyer and a seller as clients, the broker appoints a separate salesperson to represent each client These persons are charged to maintain an “arm’s-length” relationship within the firm, though the broker remains privy to the affairs of both clients There is debate whether any such device is sufficient to solve the dual agent conflict Meanwhile, numerous legal challenges to dual agency have emerged Probably the most common problem in real estate brokerage relationships is unintended dual agency As noted above and depicted in Exhibit 12-3, the normal brokerage practice of today depends on MLS systems, with a salesperson working with the buyer as a subagent of the seller Yet that salesperson typically “represents” numerous listings, has no direct contact with the seller, and meanwhile is actively engaged in fostering a personal relationship with the buyer Under these conditions, it is no surprise that a 1984 study found 74.2 percent of buyers believed that the selling agent represented them rather than the seller.3 Unfortunately, though states have universally enacted agency disclosure laws since that study, more recent survey evidence suggests little improvement in the Federal Trade Commission Staff Report: “The Residential Real Estate Brokerage Industry,” Vols and 2, 1984 www.downloadslide.com 312 Part 5  Brokering and Closing the Transaction Exhibit 12-3  The Problem of Unintentional Dual Agency Seller A Seller C Listing Salesperson A Listing Salesperson C Seller B Listing Salesperson B Listing Broker C Listing Broker A Listing Broker B Multiple Listing Service Selling Broker Many buyers in this typical MLS system think their salesperson works for them instead of the seller Buyer Salesperson Buyer buyer understanding.4 Some states now have gone so far as to enact laws stipulating that a salesperson showing a house to a prospective buyer automatically becomes the agent of the buyer unless the salesperson declares otherwise in writing at the outset of the dealings.5 ✓ Concept Check 12.11 What might a broker to mitigate the dual agency problem occurring within the firm due to the firm’s being both a listing ­broker and a buyer broker? Transaction Brokers The inherent tendency for real estate brokerage to result in dual agency has prompted nearly half of all states to create a new type of brokerage relationship known as a transaction broker or facilitating or intermediary broker (shown as the fifth case in Exhibit 12-2) In this relationship a broker assists with a transaction between a buyer and a seller, but the broker does not represent either party Transaction brokers are required to exercise skill, care, and diligence in dealing with the parties, and they must deal honestly and fairly with both parties Jonathan A Wiley and Leonard V Zumpano, “Questioning the Effectiveness of Mandatory Agency Disclosure Statutes,” Journal of Housing Research: 2004, Vol 15, No 2, pp 161–174 See, for example, Illinois, Maryland, and Washington www.downloadslide.com Chapter 12  Real Estate Brokerage and Listing Contracts 313 In other words, they owe both parties the standard business characteristics of competence and fair dealing, but they are not bound by the strict fiduciary requirements of agents As a rough approximation, the obligations of the transaction type broker are the traditional fiduciary duties, minus the obligations of loyalty and obedience and with only limited confidentiality A transaction broker’s status must also be disclosed in writing to all relevant parties.6 Agency problems within real estate brokerage remain difficult to fully solve, and no proposed solution is perfect Therefore, wise practice in use of brokerage services includes two steps: First, be sure that you clearly understand whom a broker represents Second, unless the broker is clearly a single agent representing you alone, provide information to the broker strictly on a need-to-know basis That is, not impart any more information about your income, motivations for sale, financing alternatives, or other financial matters than is clearly pertinent to the transaction, and don’t rely on the broker’s word alone as a basis for critical decisions ✓ Concept Check 12.12 What type of broker represents neither buyer nor seller? Licensing of Real Estate Brokers and Salespersons www mortgagenewsdaily com/real_estate_ license Summarizes real estate license requirements for all states For state-by-state government real estate license sites, Google state name “real estate license law.” All 50 states and the District of Columbia have licensing laws that regulate persons and companies that engage in the brokerage business In all of these jurisdictions, a license is required to conduct real estate brokerage activities, which include the purchase, sale, renting, leasing, auctioning, and managing of real estate for others State licensing laws generally prescribe two levels of real estate brokerage licensing— the broker license and the salesperson license.7 The most complete license is the broker license, because only a broker is permitted to own and operate a real estate brokerage business Brokers are responsible for the completion of documents used in sales and leases negotiated by people in their business, for handling money held in trust for clients (e.g., earnest money deposits or rent collected), and for the actions of their employees Each real estate sales office, therefore, must have at least one licensed broker To enter the brokerage business, one usually must first obtain a salesperson license.8 The salesperson can be an employee of a broker, but more commonly is an independent contractor of the brokerage firm The salesperson may perform business activities, such as negotiating listing contracts or contracts for sale, but must perform them in the name of the broker Also, laws and regulations usually strictly forbid salespersons from holding client moneys; these funds must be delivered to an appropriate broker’s trust account shortly after receiving them Many states (over 35) allow some form of reciprocity with other states for real estate licensees However, the terms of reciprocity and the number of states for which it is permitted are quite varied ✓ Concept Check 12.13 List five real estate services that require licensing to be performed for others The adoption of designated agency and of transaction or facilitating brokerage by states is detailed in periodic surveys of the Association of Real Estate License Law Officials (ARELLO) The most recent is 2015 Colorado, New Mexico, North Carolina, Oregon, and Tennessee have only a broker’s license, but each state still requires experience or additional education to qualify as an independently operating broker A number of states allow equivalencies for education and experience requirements for the salesperson license, the broker’s license, or both www.downloadslide.com 314 Part 5  Brokering and Closing the Transaction Exhibit 12-4 Organizational Structure for Administering Real Estate Licensing Laws Legislative Branch of State Government Laws Real Estate Commission Rules and Regulations Real Estate Commission Staff Day-to-day Operations Licensees Brokerage Licensing Administration As shown in Exhibit 12-4 the line of authority for real estate brokerage licensing begins with the legislative branch of state government, which originates licensing laws and amendments Interpretations of state licensing laws take the form of rules and regulations set by the state’s real estate commission The commission is usually composed of prominent brokers and nonbroker (i.e., public interest) members In some states, the commission is part of the department of state government responsible for licensing many occupations (e.g., appraisers, barbers, contractors, and morticians) The real estate commission has several functions First, it specifies educational requirements for applicants and licensees Second, it is responsible for creating and administering examinations to qualify prospective licensees Finally, the commission enforces the license law and regulations implementing the law It must hold hearings for licensees accused of violating state licensing laws and has the right to reprimand licensees and to suspend or revoke their licenses The commission staff carries out the day-to-day business of administering the license law The chief administrative officer is responsible to the commission for developing educational materials, record keeping, collecting license fees, and researching complaints against licensees How to Obtain a Real Estate License Unlike a driver’s license, a real estate license obtained in one state does not necessarily qualify one to practice real estate brokerage in another state Nevertheless, the requirements for obtaining brokerage licenses generally have become more uniform among the states in recent years A greater degree of reciprocity exists today than in the past, especially with respect to education and examination requirements To answer the question of how to obtain a broker’s license, we examine the various licensing requirements, which include exemptions, general requirements, education, examinations, and experience Exemptions.  Some persons who buy, sell, rent, or lease real estate for others are exempt from licensing laws Usually attorneys, because of their extensive legal training, are exempt Other exempt categories may include resident managers, government employees (e.g., state C.33.44.55.54.78.65.5.43.22.2.4 22.Tai lieu Luan 66.55.77.99 van Luan an.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.33.44.55.54.78.655.43.22.2.4.55.22 Do an.Tai lieu Luan van Luan an Do an.Tai lieu Luan van Luan an Do an www.downloadslide.com 652 Index correspondent relationship, 443 cost approach to appraisal, 167 cost-of-funds index, 219, 219n4 cost recovery period, 533 costs hard, 616 of real estate transactions, 14 in segmentation of market, 14 soft, 615 co-tenancy clause, 597–598 Counselors of Real Estate (CRE), 193 counteroffer, 341 County Business Patterns, 142 county government, recording process in, 55 covenant, 30, 47 restrictive, 30–31 covenant against encumbrances, 48 covenant of quiet enjoyment, 48 covenant of seizin, 47 CPM Code of Ethics, 567 credit scoring, 296 credit tenants, 559 credit union, 284 creditworthiness, 296, 559–560 cumulative classification, in zoning, 78 curtesy, 37 custodial maintenance, of property, 564 customization, in defining fixtures, 23 CVS, 605 D data in appraisal, 165 initial collection of, 133 processing, 119 data analysis, in appraisal, 165–166 debt acquiring a property with an existing, 233–234 mezzanine, 616 in refinancing decision, 267 debt coverage ratio (DCR), 440–441, 495 debt financing, 512n11 debt interests, in capital markets, 9, 10 debt refinancing, cash flows and, 487–488 debt-to-income ratio, 297 debt yield ratio (DYR), 441, 495, 496 deceptive marketing, 238 declaration of covenants, 30 dedication, 53, 79 deed, 46–50 empty, 49 general warranty, 49 grant, 49 deed—Cont involuntary conveyance by, 51–52 involuntary conveyance without, 53–54 judicial, 50 quitclaim, 50 recording, 54–55 requirements of, 47–49 special warranty, 49 trustee’s, 50 types of, 49–50 voluntary conveyance by, 51 voluntary conveyance without, 52–53 deed in lieu of foreclosure, 228 deed of bargain and sale, 50 deed of trust, 226–227 See also mortgage(s) mortgage vs., 227 deed restriction, 30–31, 48 defaults, 223, 227–228 decisions, 267–268, 443 effect on borrower, 230–231 nonforeclosure responses to, 228–229 technical, 227 defeasance clause, 436 defeasance requirement, 223 deferred maintenance, 564 deferred maintenance, of property, 564 deficiency judgment, 230 delivery of deed, 49 Dell, 155 demand clause, 224 demolition, asset management and, 573 Department of Housing and Urban Development (HUD), 5, 439 depreciation accrued, 167, 179, 180 methods of, 533–535 depreciation deductions, 531–535 cost recovery period, 533 depreciable basis, 531–533 methods of depreciation, 533–535 substantial improvements, 535 Dery, Matt, 87 descent, law of, 51 description of land in deeds, 48 methods of, 59–64, 59n10 description of property in appraisal, 165 in contract for sale, 343 design, of development projects architect, 611–614 engineers, 614 land planner, 614 landscape architect, 614 designated agents, 311 designations in sales and brokerage, 315–316 design-build construction, 619 developed land, in United States, 6, developers, 626–627 development comprehensive planning for construction, 618–620 coordination of contracting, 619–620 design, 611–614 architect, 611–614 engineers, 614 land planner, 614 landscape architect, 614 entering, 627–628 establishing site control, 606–607 feasibility analysis, 607–608 financing, 615–618 construction, 616 land acquisition, 615 mezzanine debt, 616 postconstruction, 617 growth restrictions on impact fees for marketing and leasing, 621–622 “numbers” of, 623–626 obtaining permits, 608–611 operation, 622–623 process of, 605–623 refinement, 607–608 site plan review in testing, 607–608 urban sprawl development and construction lending, 473 development process construction, 618–620 coordination of contracting, 619–620 design, 611–614 architect, 611–614 engineers, 614 land planner, 614 landscape architect, 614 establishing site control, 606–607 feasibility analysis, 607–608 financing, 615–618 construction, 616 land acquisition, 615 mezzanine debt, 616 postconstruction, 617 marketing and leasing, 621–622 obtaining permits, 608–611 operation, 622–623 process of, 605–623 refinement, 607–608 testing, 607–608 Stt.010.Mssv.BKD002ac.email.ninhd 77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77t@edu.gmail.com.vn.bkc19134.hmu.edu.vn.Stt.010.Mssv.BKD002ac.email.ninhddtt@edu.gmail.com.vn.bkc19134.hmu.edu.vn C.33.44.55.54.78.65.5.43.22.2.4 22.Tai lieu Luan 66.55.77.99 van Luan an.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.33.44.55.54.78.655.43.22.2.4.55.22 Do an.Tai lieu Luan van Luan an Do an.Tai lieu Luan van Luan an Do an www.downloadslide.com 653 Index development sequence, typical, 623 devised, 51 direct capitalization, 199 abstracting cap rates from the market, 200–202 capitalization rates, 202–203 vs discounted cash flow, 192–193 income multipliers, 203–204 using for valuation, 199–205 direct co-ownership, 34, 34–38, 489–490 direct market extraction, 200 discount brokerage, 323–324 discounted cash flow direct capitalization vs., 192–193 models, investment valuation using, 505–511 vs ratios, 497–498 discounted cash flow (DCF) analysis, 205 estimating future sale proceeds, 206–207 using for valuation, 205–208 valuing future cash flows, 207–208 word of caution, 206 discounting, 207, 387 of commercial property, 396–397 present value of annuity, 394, 396 present value of lump sum, 393–395, 394 timeline for, 394 in time value of money, 385, 393–399 with uneven cash flows, 397–399, 398 user and capital markets in, 11 discount points, 413 discount rate in comparing loans, 419, 419–420 effect of taxes on, 515, 515–516 effect on present values, 402, 402–403 discrimination in housing, 318–320 disintermediation, 277, 277n4 disposition of freeholds, 25 of leaseholds, 26–27 as property right, 20 divorce, conveyance by, 52 doctrine of constructive notice, 54 Dodd-Frank Wall Street Reform and Consumer Protection Act, 238–239, 254, 364 Dollar General, 156 Dollar Tree, 156 dominant parcel, 27 dower, 37 down payment, 251 dual agency, 309, 309–310 unintentional, 312 due diligence, 445–446 due-on-sale clause, 226 E early payment mortgage (EPM), 421 earnest money, 361, 365 easement, 27, 29 implications of, 28, 29 implied, 53 vs license, 30 rights of, 29 easement appurtenant, 27, 27, 28 easement by estoppel, 53 easement by prescription, 53 easement by prior use, 53 easement in gross, 28 easement of necessity, 53 eBay Real Estate, 10 EBIDTA (earnings before deductions for interest, depreciation, income taxes, and amortization), 192n2 economic and environmental impact statements, 74 Economic and Housing Recovery Act, 258 economic base, 102 indicators of, 105–106 local economic activities and, 104 multiplier, 103–104 economic base multiplier, 103–104 economic rationale for employing a broker, 306–307 economic vacancy rate, 197n8 economies agglomeration, 107–108 agriculture-based, 102 real estate and, 5–7 economies of scale industry, 107 effective borrowing cost (EBC), 414 computation of, 414–416 holding period and, 416–418, 417 prepayment and, 415–416 up-front costs and, 416–418 effective gross income (EGI), 195–197, 197 effective gross income multiplier (EGIM), 203 effective rent, 587, 587–589 effective tax rate, 91, 517 elective share, 37, 37n21, 38 electrical engineer, 614 Elysian Forest, planned unit development example, 135–140 eminent domain, 52, 83 encroachments, 57 Endangered Species Act, 22, 608 energy efficiency standards, 77 Energy Star program, 620 enforcement of deed restrictions, 30, 30n9 recording in, 54–55 engineers, 614 civil, 614 electrical, 614 mechanical, 614 soils, 614 structural, 614 English common law, 225 environmental engineers, 86 environmental hazards, 82–83 environmental impact report (EIR), 608 environmental impact statement (EIS), 608 environmental movement, in land use planning, 75 Environmental Protection Agency (EPA), 82, 83 Environmental Value Assessment (EVA), 83 Equal Credit Opportunity Act (ECOA), 236 equations, for time value of money, 387, 387–388 equitable title, 343 equity, negative, in default decision, 267 equity dividend rate (EDR), 493, 496 equity interests, in capital markets, 9, 10 equity of redemption, 229 equity REITs, 469 equity returns, 442–443 errors and omission insurance, 315 escrow, 362–363 escrow account, 225 in contract for sale, 361 for earnest money, 365 escrow agent, 362–363 escrow clause, 225 escrow closings, 379–380 estate for years, 24 estate(s), 24, 24–27 estimated closing costs, 368–372, 369–371 estoppel, easement by, 53 Evans, Edna, 322 Evans, Lloyd, 322 evidence of title, 55–59, 56, 57 exceptions and reservations clause, 48 exclusionary zoning, 78 exclusive agency listing, 322 exclusive classification, in zoning, 78 exclusive right of sale listing, 322–323 exculpatory clause, 224 expansion option, 586 expected investment yield, use of term, 400 Stt.010.Mssv.BKD002ac.email.ninhd 77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77t@edu.gmail.com.vn.bkc19134.hmu.edu.vn.Stt.010.Mssv.BKD002ac.email.ninhddtt@edu.gmail.com.vn.bkc19134.hmu.edu.vn C.33.44.55.54.78.65.5.43.22.2.4 22.Tai lieu Luan 66.55.77.99 van Luan an.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.33.44.55.54.78.655.43.22.2.4.55.22 Do an.Tai lieu Luan van Luan an Do an.Tai lieu Luan van Luan an Do an www.downloadslide.com 654 Index expenses fixed, 197 variable, 197 externalities, 70, 71 congestion, 71 impact fee, 81 internalizing, 81 negative, 71 urban sprawl, 71–72 extraterritorial jurisdiction, 74 F facilitating brokers, 312 Fair Housing Act, 318, 319 fallout risk, 280 Family Dollar, 152 Fannie Mae, 223n9, 230, 237, 245, 246n2, 287, 288–289, 290, 439 conforming standards of, 247–248, 247n5 importance of, 289–291 status of, 289–291 fast-track construction, 619 feasibility analysis, of project, 607–608 Federal Aviation Administration, 208 Federal Deposit Insurance Corporation (FDIC), 11 federal government eminent domain of, 83–88 in environmental hazard regulation, 83 Fifth Amendment and, 83n6 role in real estate market, 11 Federal Home Loan Banks, 291–292 Federal Home Loan Mortgage Corporation, 285 See also Freddie Mac Federal Housing Administration (FHA), 223n9, 226, 250, 252–253, 439 Federal Reserve Bank, 107 Federal Reserve Board, 219n4 Federal Reserve System (Fed), 11, 278 Federal Truth-in-Lending Act of 1968 (TILA), 364 Federl Deposit Insurance Corporation (FDIC), 282 fee simple absolute, 24, 25 fee simple conditional, 24, 25 fee simple estate, 209 FHA Home Equity Conversion Mortgage (HECM), 257–258 FHA mortgage insurance, 251 FHA mortgage loans, 251–253 reverse mortgages, 257–258 fiberglass, as environmental hazard, 82 Fidelity Federal Savings and Loan v De la Cuesta, 226 fiduciary relationship, 308 fiduciary responsibilities accounting, 308 confidentiality, 308 disclosure, 308 loyalty, 308 obedience, 308 skill and care, 308 Financial Institutions Reform, Recovery and Enforcement Act (FIRREA), 277 financial risk, 442 financial risk ratios, 494–497 financing construction, 616 land acquisition, 615 mezzanine, 616 postconstruction, 617 financing terms, in appraisal, 167 fire safety codes, 77 fixed expenses, 197 fixed rate financing typical loan terms on, 434 fixed-rate mortgages, 418–421 balance on, 412–413 payments on, 411–412, 412n1 fixture, 22 flat lease scheduled rents for, 582 flat rent, 581 Fleming Realty and Insurance, Inc., 322 flex space, 598 floating-rate mortgage, 436–437 floor loan, 617 Florida bankruptcy in, homestead protection from, 32, 32n13 building codes in, 77 Community Development Districts in, 92 contract for sale in, 347–360 government rectangular survey of, 64, 65 homestead exemption in, 90, 90n16 property tax rate limitations in, 93 tenancy by the entirety, 35 timesharing in, 39 Florida East Coast Railroad Depot, 119 Florida Supreme Court, 625 foreclosure, 227, 229–230 bankruptcy and, 232–233 conveyance by, 52 deed in lieu of, 228 judicial, 231–232 for nonpayment of taxes, 92 form-based zoning, 81 Forsythe Appraisals LLC, 201 fracking, 40 fraud, 342, 342n1 Freddie Mac, 223n9, 230, 237, 245, 246n2, 285, 287, 289, 290, 439 See also Federal Home Loan Mortgage Corporation importance of, 289–291 status of, 289–291 freeholds, 25, 29 Frej, Anne B., 132n3 frictional vacancy, 197n7 See also natural vacancy rate FTSE NAREIT, 571 full platform operating company, 468 funds from operations (FFO), 477 future cash flows valuing, 207–208 future sale proceeds estimating, 206–207 future value, 387 of annuity, 389, 392–393 equation for, 387, 387–388 of annuity due, 393 factors in, 385 internal rate of return and, 399–400 of lump sum, 388–390, 389, 391 equation for, 387, 387–388 risk in, 385 time in, 385 G gap financing See mezzanine debt garden apartments, 590 gas rights, 40, 41 general agent, 308 general contractor, 618, 622 general lien, 31, 32n12 general partnership, 458 General Service Administration (GSA), 5 general warranty deed, 49 geographical information systems (GIS), 153–154 Ginnie Mae, 285, 287–288 See also Government National Mortgage Association (GNMA) Global Industry Classification Standard (GICS), 471 GNMA mortgage-backed security process, 286 going-concern value, 163n3 going-in cap rate, 201, 492, 492–493 going-in IRR, use of term, 400 going-out cap rate, 206 goods comparison, 121 convenience, 120–121 Stt.010.Mssv.BKD002ac.email.ninhd 77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77t@edu.gmail.com.vn.bkc19134.hmu.edu.vn.Stt.010.Mssv.BKD002ac.email.ninhddtt@edu.gmail.com.vn.bkc19134.hmu.edu.vn C.33.44.55.54.78.65.5.43.22.2.4 22.Tai lieu Luan 66.55.77.99 van Luan an.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.33.44.55.54.78.655.43.22.2.4.55.22 Do an.Tai lieu Luan van Luan an Do an.Tai lieu Luan van Luan an Do an www.downloadslide.com 655 Index government in real estate market, 10–11 in rights enforcement, 19 Government National Mortgage Association (GNMA), 285 See also Ginnie Mae government rectangular survey, 61–64, 62, 63, 64, 65 government-sponsored enterprises (GSEs), 245, 246n2, 287 See also Fannie Mae; Freddie Mac government-sponsored mortgage programs, 250–255 government-sponsored programs, 439 Graaskamp, James, 150, 627 graduated lease scheduled rents for, 582 graduated rent, 581 grant deed, 49 grantee, 47 grantor, 47 Great Depression, 227, 276 Great Lakes shipping, 102 Great Recession, 234, 300 green building codes, 77 Green Buildings Initiative, 620 Green Globes, 620 Greenspan, Alan, 301 gross floor area, 596 gross income effective, 195–197 potential, 194–195 gross income multiplier (GIM), 203n14 gross leasable area (GLA), 596 gross lease, 582 ground lease, 607 growth restrictions Guttentag, Jack M., 425 H habendum clause, 48 hard costs, 616 hazard insurance in closing costs, 368 prorating, 367 hazardous substances clause, 226 health codes, 77 highest and best use, 166 high-rise apartment buildings, 589 HOEPA, 238 holding period effective borrowing cost (EBC), 416–418, 417 holdouts, 71 home equity loan, 255–256 home financing for marginal borrowers affordable housing loans, 299–300 subprime lending, 300–301 home loan, borrower of, 294–296 Home Mortgage Disclosure Act (HMDA), 239 home mortgage finance commercial banks, 278–279 revolution in, 275–279 rise of a world economy and the demise of the thrifts, 276–278 home mortgage lenders, consolidation in, 283 home mortgage lending, 292–294 Community Reinvestment Act (CRA), 239 Dodd-Frank Wall Street Reform and Consumer Protection Act, 238–239 Equal Credit Opportunity Act, 236 Home Mortgage Disclosure Act, 239 Home Ownership and Equity Protection Act, 238 Real Estate Settlement Procedures Act, 237 regulation of, 236–239 Truth-in-Lending Act, 236 home mortgage loans, market for, 274–275 home mortgage underwriting modern, 297–298 traditional, 296–297 homeowners tax factors affecting, 548–550 Home Ownership and Equity Protection Act (HOEPA), 238 Homeowner’s Policy of Title Insurance, 57–58 homestead protection from bankruptcy, 32, 32n13 protection from liens, 32, 32n12 homestead exemption, 90, 90n16 Honda, 276 hospitality property, 401, 599 cash flows of, 401 Hotel and Motel Brokers of America, 318 hours of operation, 598 housing discrimination in, 318–320 expense ratio, 297 in household wealth, 7, low-income, 536 subsidy programs, 11 housing finance modern, 275 traditional, 275 housing type, in segmentation of market, 14 Houston, Texas, zoning absent from, 72, 73 Hoyt, Homer, 114, 117 Hummel, Alan, 201 hurricanes, 77 hybrid ARM, 259–260 I Ileka v Lyons, 319 impact fee, 81 implied easement, 53 improvements in highest and best use analysis, 166 leased premises, 584 improvements on the land, improvements to the land, inclusion of mortgage covenants by reference, 224 income See also net operating income (NOI) capitalization, 192 estimating appropriate, 489 multipliers, 203–204 property taxation and, 93 income approach to appraisal, 167 income-producing properties, appraisal of, 167 income subject to taxation, 526–527 income taxes in investment decisions, 490–491 and investor cash flows, 515–517 in refinancing, 265–266 income tax rates, 527–528 index rate, 219–220, 421–422 indicated value, 169 indirect co-ownership, 33, 34 industrial properties common lease provisions of, 598–599 and leases, 598–599 industrial property, 401 cash flows of, 401 industry, real estate as, industry economies of scale, 107, 107, 121–123 and clustering, 121–123 informal appraisal, 161 infrastructure monopolies in, 74 Initiative for a Competitive Inner City (ICIC), 156 innovations in brokerage, 323–324 Institute of Real Estate Management (IREM), 198, 561, 567, 568, 592 institutional-grade real estate, 14 Stt.010.Mssv.BKD002ac.email.ninhd 77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77t@edu.gmail.com.vn.bkc19134.hmu.edu.vn.Stt.010.Mssv.BKD002ac.email.ninhddtt@edu.gmail.com.vn.bkc19134.hmu.edu.vn C.33.44.55.54.78.65.5.43.22.2.4 22.Tai lieu Luan 66.55.77.99 van Luan an.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.33.44.55.54.78.655.43.22.2.4.55.22 Do an.Tai lieu Luan van Luan an Do an.Tai lieu Luan van Luan an Do an www.downloadslide.com 656 Index institutional investors, 464, 464 vs noninstitutional investors, 468 insurable value, 163n3 insurance clause, 225 intangible assets, intention, in defining fixtures, 23 Intercontinental Hotel Group, 130 interest charges, 218–219 interest-only amortizing mortgages, 259, 260 interest-only balloon mortgages, 259, 260 interest-only mortgages, 420 interest rate holding period and, 417 index rate, 421–422 lender’s yield, 413–414 teaser rate, 421, 421–422 interest rate risk, 280 interest rates, 218–219 fixed, 218–219 variable, 218–219 interest rate spread, in refinancing, 266 interest rate swap, 433n3 interests, 23 nonpossessory, 27–32 possessory, 24–27 interlease risk, 588 intermediaries, 462 intermediary brokers, 312 internal rate of return (IRR), 202, 399 going-in, use of term, 400 impact of leverage, 512 investment decisions about office buildings, 510 vs net present value, 510–511 required, determining, 402, 402–403, 403 taxes and, 516, 516–517 International Association of Assessing Officials (IAAO), 94 International Council of Shopping Centers, 198, 318, 594 Internet data exchange (IDX), 320 internet marketing, 320 Interstate Highway System, 118 intestate, 51 inverse condemnation, 86–88, 87 investment-grade properties, 14, 403, 403 investments securitized, 465 investment valuation vs market valuation, 504–505 using discounted cash flow models, 505–511 investment value, 163, 404, 404–405 investment yield, expected, use of term, 400 ITRA Realty Group, 587 J Jensen Beach, 625 “JOBS” Act of 2012, 469 “Jobs and Growth” tax relief package, 469n9 John Laing Homes, 22 joint tenancy, 34, 35 Jones v Mayer Co, 319 J P Morgan Chase & Co., 276, 279 judicial deed, 50 judicial foreclosure, 231 vs power of sale, 231–232 jumbo loans, 247–248 just compensation, 86 K Kelo, Susette, 86, 87 kickbacks, prohibition against, 364 Kroger, 559 L labor force characteristics, 106 laches, 30, 30n10 land, acquisition financing, 615 in future income risk, 400–401 land acquisition loans, 449 land description in deeds, 48 methods of, 59–64, 59n10, 60 land development loans, 449 landlock, easements for, 53 landlord, property rights of, 23 landlord-tenant laws, 562–563 state-based, 563 land planners, 81, 614, 614 landscape architect, 614, 614 land use changes in, 6, counterarguments to land use controls, 72–72 externalities, 71–72 incomplete information, 72 monopolies, 70–71 regulation of, 70–72 building codes in, 77 counterarguments to, 72 in risk, 400–401 uncertainty and value stability, 72 in United States, 6, urban, 113 land use control building codes in, 77 challenges in, 75 comprehensive, 74 conflicting notions of best practice, 75–76 land use control—Cont counterarguments to, 72 legality of, 78–80 modern tools of, 80–82 public planning for, 73–76 administration of, 79–80 comprehensive planning, 74 revolution in, 75 subdivision regulations, 79 zoning in, 76–82 land use negotiation thoughts of an experienced developer on, 610–611 land value, in appraisal, 166 land value contours bid-rent curves and, 113 late fees, 223 lawful intent, required for contract for sale, 341 law of agency, 308–313 fiduciary responsibilities, 308–309 real estate agents, 309–310 comparison of traditional agency relationships, 310 dual agency, 309–310 subagency, 309 types of agents, 308 law of descent, 51 law(s) on environmental hazards, 82 licensing, 313 zoning under, 75, 78 lawsuit, for nonperformance, 362 leadership, quality of life and, 106 Leadership in Environmental Efficiency and Design (LEED), 620 leaking underground storage tanks (LUSTs), 82–83 Lear Jet, 107 leased fee estate, 209 leasehold estates, 24, 26–27, 29 lease options, 585–586 cancelation option, 586 expansion option, 586 relocation options, 586 renewal options, 585 lease(s) broader considerations, 588–589 commercial, 561 essential elements of, 579 ground, 607 industrial properties and, 598–599 negotiated provisions, 579–587 net, 582 office properties and, 591–594 the property, 557–559 property managers and, 561–562 Stt.010.Mssv.BKD002ac.email.ninhd 77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77t@edu.gmail.com.vn.bkc19134.hmu.edu.vn.Stt.010.Mssv.BKD002ac.email.ninhddtt@edu.gmail.com.vn.bkc19134.hmu.edu.vn C.33.44.55.54.78.65.5.43.22.2.4 22.Tai lieu Luan 66.55.77.99 van Luan an.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.33.44.55.54.78.655.43.22.2.4.55.22 Do an.Tai lieu Luan van Luan an Do an.Tai lieu Luan van Luan an Do an www.downloadslide.com 657 Index lease(s)—Cont residential rental properties and, 589–591 retail properties and, 594–598 lease term, 580, 591 leasing agents, 559 brokers, 558 commissions, 198n10 marketing and, 621–622 legal characteristics, in value of property rights, legal life estates, 24, 25 legal proceedings, deeds in, 50 legal title, 343 lender(s) in capital markets, 9, 10 in closing, 363–364 lender’s mortgage loan decisions ability-to-repay standard, 298 cash down payment requirement, 299 modern home mortgage underwriting, 297–298s recent underwriting failures, 299 traditional home mortgage underwriting, 296–297 capacity (ability to pay), 296–297 collateral, 296 creditworthiness, 296 lender’s yield, 414 computation of, 413–414 prepayment and, 415–416 Lennhoff, David C., 192n1 level-payment mortgages (LPMs), 246–247, 418 loan term for, 418–420 risk of, 424–425 leverage effect on cash flow, 506–507 effect on IRR, 512 effect on NPV, 512 impact on expected returns, 511–512, 512 impact on risk, 512–515, 513 levered cash flow, 506–507 liability assume, 233 in commercial loans, 431–432 release of, 233 LIBOR (London Interbank Offering Rate), 219, 219n5 license, 30 license law infractions, 315 failure to provide required information, 315 improper business practices, 315 improper handling of fees, 315 license law infractions—Cont mishandling trust money, 315 misrepresentation and fraud, 315 licensing laws, 313 of real estate brokers, 313–315 of salespersons, 313–315 lien(s), 31 assessment, 31 community development district lien, 31 consequences of, 32 general, 31, 32, 32n12 mechanics’, 32 mortgage, 31–32 priority of, 32 property tax, 31 specific, 31 lien theory, 225 and title theory, 225n10 life estates, 24, 25 life insurance policies, 463–464 lighting, 118–119 like-kind exchange, 548 limited liability company (LLC), 439, 460–461 limited partnership (LP), 439, 458–459 lines of credit, open-end, 255 linkages, 101 Linne, Mark R., 201 listing contracts, 309, 321 exclusive agency listing, 322 exclusive right of sale listing, 322–323 open listing, 322 provisions, 324–334 splitting the commission, 325–327 termination of, 325 termination of, 325 types of, 322–323 load factor, 593 loan balance, 412–413 Loan Estimate, 364 loan officer, 224 loan originators, 224 loan(s) application to closing, 445–446 assumable, 226 balloon, 222 broker, 224 bullet, 433n2 collateral, 296 commitment, 280 construction, 449 flipping, 238 floor, 617 land acquisition, 449 loan(s)—Cont land development, 449 miniperm, 449, 617 nonamortizing, 221 nonrecourse, 224 partially amortizing, 221 recourse, 224 securitizing, 281 servicing, 282 size, 442 submission package and application, 444–445 subprime, 223, 261, 300 thoughtlessness of, 14 terms, 440–441 loan submission package, 444–445 loan-to-value ratio (LTV) for home equity loan, 256 in investment decision, 495, 496 loan underwriting, 296 local economic activities, 104 See also secondary activities economic base and, 104 local government comprehensive planning in, 74 eminent domain of, 83 property taxation by, 88 in subdivision development, 79 localization, of real estate markets, 13–14 local property markets, in real estate asset production, 11–12 location characteristics in heterogeneity of real estate, 13 in value of property rights, location quotient, 106 location-value signature (LVS), 13 lockout provision, 435 Love Canal, 75, 83 low-income housing, 536 Lucas, David, 88 Lucas v South Carolina Coastal Council, 88, 88n13 lump sum, 387 future value of, 388–390, 389, 391 equation for, 387, 387–388 present value of, 393–395, 394 equation for, 387, 387–388 LUSTs (leaking underground storage tanks), 82–83 Lyons, Mary, 319 M maintenance as an investment decision, 564–566 management agreement, 566 management fees, 567–568 Stt.010.Mssv.BKD002ac.email.ninhd 77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77t@edu.gmail.com.vn.bkc19134.hmu.edu.vn.Stt.010.Mssv.BKD002ac.email.ninhddtt@edu.gmail.com.vn.bkc19134.hmu.edu.vn C.33.44.55.54.78.65.5.43.22.2.4 22.Tai lieu Luan 66.55.77.99 van Luan an.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.33.44.55.54.78.655.43.22.2.4.55.22 Do an.Tai lieu Luan van Luan an Do an.Tai lieu Luan van Luan an Do an www.downloadslide.com 658 Index managers asset, 556 construction, 618 property, 556 margin, 220, 421, 421–422 marketable title, 49, 49n2 marketable title laws, 58–59 market analysis in appraisal, 165–166 important techniques in, 133–135 market analysis techniques, 133–135 example, 134–135 excluding the irrelevant, 134 finding proxy variables, 134 using analogy, 134 market data, sources of, 170 market errors, minimizing, 101 market facilitators real estate brokers as, 306 marketing aggressive, 238 deceptive, 238 internet, 320 and leasing, 621–622 market misjudgments in real estate, 100 market parameters, 133 market projections, and real estate cycles, 151–152 market rents, 194n4, 195 market research, 130–131 cycle of, 132 Elysian Forest, planned unit development example, 135–140 examples of, 135–150 final notes on the process of, 151 first analysis, 133 improving one’s capacity in, 151 initial collection of data, 133 market-defining story, 132–133 market projections and real estate cycles, 151–152 Palm Grove Office Complex example, 140–142 Plane Vista Apartments example, 142–150 refining, 133 reverse to conventional, 133 tools of, 153–156 geographical information systems (GIS), 153–154 psychographics, 154 survey research, 155–156 market research tools geographical information systems (GIS), 153–154 psychographics, 154 survey research, 155–156 market(s) capital (See capital markets) characteristics of, 13–15 externalities in, 71–72 for home mortgage loans, 274–275 localization of, 13–14 segmentation of, 14 unregulated, 70, 71 market segmentation, 131, 316 market valuation vs investment valuation, 504–505 market value, 162–163, 162n1 See also valuation reconciliation of, 168 marriage ownership interest from, 36–38 tenancy by the entirety, 35 Marriott, Hilton, 130 maturity imbalance problem, 248 McGurn, Ken, 613, 627 McGurn, Linda, 627 McGurn Investment Company, 627 Mears, Teresa, 326 mechanical engineer, 614 mechanics’ liens, 32 megamortgage banking, 282–284 Member of the Appraisal Institute (MAI), 162 metes and bounds, 59–60, 60 mezzanine debt, 616 mezzanine financing, 616 mezzanine loans, 439 Miami Herald, 284 Michigan, eminent domain in, 85 Microsoft, 559 Microsoft Excel, 388 millage rate, 90 mills, 90 mineral rights, 41 miniperm loan, 449, 617 minors, legal competency of, 341 mitigation banking entrepreneurship, 85 modern home mortgage underwriting, 297–298 Modigliani, Franco, 261 mold, as environmental hazard, 82 monopolies, regulation of, 70–71 Moody’s, 559 mortality risk, in reverse mortgages, 257 mortgage-backed securities, 285–287 mortgage banking, 279 creating and funding, 280 cycle, 282 loan commitment, 280 megamortgage banking, 282–284 and mortgage brokerage, 279–284 pipeline risk, 280–281 mortgage banking—Cont pooling and securitizing loans, 281 servicing the loans, 282 mortgage brokerage mortgage banking and, 279–284 mortgage brokers, 254, 279, 284 mortgage debt outstanding by type of loan, 274 mortgagee, 225 mortgage insurance FHA, 251 private mortgage insurance (PMI), 246–247, 248–250 mortgage insurance premium (MIP), 251, 252 mortgage liens, 31–32 mortgage loans adjustable rate mortgage (ARM), 421–425 adjustment periods of, 423 considerations in choosing, 425 example of, 421–422, 422 hybrid, 259–260 vs LPMs, 248 mechanics of, 421 option, 260–261 rate caps for, 423–425, 424 share of mortgage originations, 423, 423 teaser rates for, 421, 421–422 Alt-A, 261–262 alternative amortization schedules for, 420–421 balloon amortizing, 259, 260 calculations for, 412–418 choosing, 263 comparing costs of, 263–265 conforming conventional, 247 conventional, 246 prime, 246–250 early payment, 421 FHA loans, 251–253 fixed-rate, 418–421 balance on, 412–413 payments on, 411–412, 412n1 government-sponsored, 250–255 home equity loan, 255–256 hybrid ARMs, 259–260 interest-only, 420 interest-only amortizing, 259, 260 interest-only balloon, 259, 260 jumbo, 247–248 level-payment, 418 nonconforming conventional, 247 option ARMs, 260–261 partially amortizing, 420 piggyback, 255 Stt.010.Mssv.BKD002ac.email.ninhd 77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77t@edu.gmail.com.vn.bkc19134.hmu.edu.vn.Stt.010.Mssv.BKD002ac.email.ninhddtt@edu.gmail.com.vn.bkc19134.hmu.edu.vn C.33.44.55.54.78.65.5.43.22.2.4 22.Tai lieu Luan 66.55.77.99 van Luan an.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.33.44.55.54.78.655.43.22.2.4.55.22 Do an.Tai lieu Luan van Luan an Do an.Tai lieu Luan van Luan an Do an www.downloadslide.com 659 Index mortgage loans—Cont primary market for, 245 prime, 246–250 private mortgage insurance for, 248–250 purchase-money, 254–255 Qualified Mortgage, 262 reverse, 256–258, 257, 258 secondary market for, 245–246 size of, 264 subprime thoughtlessness of, 14 VA-guaranteed, 253 mortgage market, primary, 245 mortgage menu, 245 mortgage notes adjustable rates, 219–221 index rate, 219–220 margin, 220 payment caps, 221 rate caps, 221 teaser rates, 221 interest rate and interest charges, 218–219 The Mortgage Professor, 425 mortgage REITs, 469 mortgage(s), 31, 224–226, 225 See also deed of trust acceleration clause, 226 adjustable rate, 219 balloon, 433–435 bankruptcy and foreclosure, 232–233 in commercial loans, 432–433 commercial mortgage loan(s) approval process, 443–448 balloon mortgage, 433–435 default decisions, 443 due diligence, 445–446 financial leverage, 442–443 financial risk, 442 floating-rate loans, 436–437 government-sponsored programs, 439 loan submission package, 444–445 loan terms, 440–441 maximum loan amount, 446–448 mezzanine loans, 439 mortgage in, 432–433 note for, 431–432 participation mortgages, 437 prepayment, 443 prepayment penalties, 436 prepayments, 435–436 sale-leasebacks, 437 second mortgage, 438–439 size of, 442 vs treasury yields, 435 mortgage(s)—Cont in condominiums, 35 in cooperatives, 36 vs deed of trust, 227 default, 227–228 deficiency judgment, 230 description of the property, 225 due-on-sale clause, 226 escrow clause, 225 floating-rate, 436–437 foreclosure, 229–230 hazardous substances clause, 226 insurance clause, 225 judicial foreclosure vs power of sale, 231–232 participation, 437 par value, 435 payment affordability, 434 permanent, 433–436 prepayments, 435–436 preservation and maintenance clause, 226 real estate debt without, 234–235 recording, 54–55 residential, 223n8 second, 438–439 secondary market for residential, 284–285 mortgagor, 225 MSCI, 571 multifamily property, 401 multinuclei city, 117 multiple city centers, 112–113 multiple listing service (MLS), 309 comparable sales data in, 170 multipliers, 494 Municipal Utility Districts (MUDs), 92 mutual assent, 341, 342 N National Association of Colleges and Employers, 619 National Association of Home Builders Model Green Home Guidelines program, 620 National Association of Industrial and Office Properties, 318 National Association of Mortgage Brokers (NAMB), 254 National Association of Realtors (NAR), 5, 234, 315–316, 320 National Council of Real Estate Investment Fiduciaries (NCREIF), 571 National Family Mortgage, 234 National Housing Act, 250, 250n10 National Resources Inventory Report, 6, 6 natural vacancy rate, 195 See also frictional vacancy negative amortization, 221, 238 negative equity, in default decision, 267 negative externalities, 71 negative financial leverage, 442 negotiated lease provisions, 579–587 access to premises, 586 advertising and signage, 586 alterations and improvements, 584 assignment and subletting, 584–585 concessions, 584 lease options, 585–586 cancelation option, 586 expansion option, 586 relocation options, 586 renewal options, 585 lease term, 580 operating expenses, 582–583 parking, 586 rental payments, 581–582 base rent, 582 flat rent, 581 graduated rent, 581–582 percentage rent, 582 subordination and non-disturbance, 587 use of the premises, 580 neighborhood shopping center, 595 net asset value (NAV), 477 net benefit income tax and, 265 in refinancing, 264–265 net income multiplier (NIM), 494 net listing, 306 net operating income (NOI), 192, 199 estimating, 193–199 net operating income (NOI), estimating, 193–199 capital expenditures, 198–199 effective gross income, 195–197 net operating income, 199 operating expenses, 197–198 potential gross income, 194–195 net present value (NPV), 405 cash multiple vs., 607 impact of leverage, 512 vs internal rate of return (IRR), 510–511 investment decisions about office buildings, 508–510, 509 in refinancing, 264 taxes and, 516, 516–517 net sale proceeds (NSP), 207 new construction pace of, local markets in, 12 volatility of process, 12 Stt.010.Mssv.BKD002ac.email.ninhd 77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77t@edu.gmail.com.vn.bkc19134.hmu.edu.vn.Stt.010.Mssv.BKD002ac.email.ninhddtt@edu.gmail.com.vn.bkc19134.hmu.edu.vn C.33.44.55.54.78.65.5.43.22.2.4 22.Tai lieu Luan 66.55.77.99 van Luan an.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.33.44.55.54.78.655.43.22.2.4.55.22 Do an.Tai lieu Luan van Luan an Do an.Tai lieu Luan van Luan an Do an www.downloadslide.com 660 Index new listing services, 323–324 new urbanism, 76 New York Stock Exchange (NYSE), in market value, 161 New York Times, 295 NIMBY phenomenon, 621 nonamortizing loan, 221 nonconforming conventional loans, 247 nonconforming uses, 78 non-disturbance, 587 nonforeclosure responses to default, 228–229 noninstitutional investors vs institutional investors, 468 nonjudicial foreclosure, 231 See also power of sale nonperformance, remedies for, 362–363 nonpossessory interests, 27–32 nonrecourse loans, 224, 431–432 nontax revenue, 89 note, 218 See also mortgage loans adjustable rates, 219 index rate, 219 margin, 220 payment cap, 221 rate caps, 221 teaser rate, 221 bankruptcy and foreclosure, 232–233 for commercial mortgage loan, 431–432 default, 227–229 deficiency judgment, 230 demand clause, 224 foreclosure, 229–230 interest rate and interest charges, 218–219 judicial foreclosure vs power of sale, 231 late fees, 223 mortgage or deed of trust, 224–227 acceleration clause, 226 description of the property, 225 due-on-sale clause, 226 escrow clause, 225 hazardous substances clause, 226 insurance clause, 225 preservation and maintenance clause, 226 payments, 221–222 personal liability, 223–224 prepayment penalties, 223 right of prepayment, 222–223 term, 222 notice actual, 55 constructive, 54 O occupancy, certificate of, 617 offer, required for contract for sale, 341–342, 361 office buildings common lease provisions of, 593–594 defining rentable space in, 592–593 expense stops, 593–594 investment decisions about assumptions in, 485 before-tax equity reversion (BTER) in, 507–508 debt financing, 487–488 example, 484–485 financial risk ratios, 494–497 income tax in, 490–491 internal rate of return, 510 multipliers, 494 net present value in, 508–510, 509 profitability ratios, 492–493 investment valuation, 505–506, 505–506 and leases, 591–594 lease terms, 593 levered cash flow, 506–507 unlevered cash flow, 506–507 Office Depot, 155 office properties common lease provisions of, 593–594 defining rentable space in, 592–593 expense stops, 593–594 and leases, 591–594 lease terms, 593 offices, new forms of, 118–119 oil rights, 41 commercial property brokerage, 322 open-end line of credit, 255 open listing, 322 operating expense escalation clause, 583 operating expense ratio (OER), 494–495, 496 operating expenses vs capital improvements, 530 operating expenses (OE), 197, 197–198, 197n9, 582–583 estimates, appropriate, 489 opportunity cost, 267, 394 optimal ownership form, 461–462 option, on the land, 606 option ARM, 260–261 ordinary annuity, 387 ordinary life estate, 24, 25 Otis, Elisha, 114 outlet center, 595 overall capitalization rate, 201 overall caps, 221 owner associations, in condominiums, 36 ownership estates, 25 Owner’s Policy of Title Insurance, 57–58 P Palm Grove Office Complex example, 140–142 parcel, 27 parking, 586 partial interests, valuing, 209–210 partially amortizing loan, 221 partially amortizing mortgages, 420 participation mortgages, 437 partnerships, 489–490 par value, 435 patent, 51 payback period, in refinancing, 266 payment, for mortgage, calculating, 411–412 payment caps, 221 payments, 221–222 Peiser, Richard, 132n3 pension funds, 463 percentage rent, 582 clause, 596–597 performance evaluation and compensation, 571 performance standard, 81 periodic caps, 221 periodic tenancy, 24, 26 permanence potential, 560 permanent mortgages, 433–436 penalties, 436 typical loan terms on, 434 permits, development projects and, 608–611 personal liability, 223–224 personal performance, 361 personal property, 4, 20 fixtures as, 22–23 personal residence, liens on, 32, 33 personal rights, 20, 20 Pfizer, 86, 87 Phase I EVA (Environmental Value Assessment), 83 piggyback loan, 255 pipeline risk, 280, 280–281 PITI, 297 Plane Vista Apartments example, 142–150 Plane Vista Orlando, Florida, 143 planned unit development (PUD), 80 planning commission, 80 plat lot and block number, 61, 62 plat map, 61, 62 police power, 70, 76–78, 79, 94 pooled equity investments, 457–462 Stt.010.Mssv.BKD002ac.email.ninhd 77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77t@edu.gmail.com.vn.bkc19134.hmu.edu.vn.Stt.010.Mssv.BKD002ac.email.ninhddtt@edu.gmail.com.vn.bkc19134.hmu.edu.vn C.33.44.55.54.78.65.5.43.22.2.4 22.Tai lieu Luan 66.55.77.99 van Luan an.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.33.44.55.54.78.655.43.22.2.4.55.22 Do an.Tai lieu Luan van Luan an Do an.Tai lieu Luan van Luan an Do an www.downloadslide.com 661 Index pooling, and securitizing loans, 281 portfolio lenders, 279 positive externalities, 71 positive financial leverage, 442 possession adverse, 53, 53n6 as property right, 20 possessory interest, 24–27 postconstruction financing, 617 potential gross income (PGI), 194, 194–195 power of attorney, 341 power of sale, 224, 230n20, 231 See also nonjudicial foreclosure judicial foreclosure vs., 231–232 for residential mortgages, 231 power shopping center, 595 premises access to, 586 condition of, 591 repairing and maintaining, 564–566 use of, 580 premiums for FHA mortgage insurance, 251–252 for private mortgage insurance, 249–250 prorating, 367 prepayment effective borrowing cost and, 415–416 lender’s yield and, 415–416 prepayment penalties, 223, 238, 436 yield maintenance, 223 present value, 387 vs acquisition price, 404, 404–405 of annuity, 394, 396 equation for, 387, 387–388 effect of discount rates on, 402, 402–403 internal rate of return and, 399–400 loan term and, 419, 419 of long-term cash flows, 399 of lump sum, 393–395, 394 equation for, 387, 387–388 as point of indifference, 395 preservation and maintenance clause, 226 preventive maintenance, of property, 564 price-earnings (PE) ratios, 192 primary mortgage market, 245 prime conventional mortgage loans, 246–250 “prime” home mortgage loans, 289 principal, 308 principal meridian, 61 private conduits, 291 private data services, for comparable sales data, 170 private debt, in capital markets, 9, 10 private equity, in capital markets, 9, 10 private mortgage insurance (PMI), 246–247, 248–250 probate, 37, 37n20, 51 production revolution, 118 profession, real estate as, professional associations and designations, 568–569 Professional Real Estate Development: The ULI Guide to the Business (Peiser and Frej), 132n3 profitability ratios, 492–493, 497–498 pro forma, 205 project, cycle of evolving, 609 property, acquiring with an existing debt, 233–234 corrective maintenance of, 564 custodial maintenance of, 564 decision to improve or alter, 571–573 deferred maintenance of, 564 description of, 225 leasing, 557–559 marketing, 557 nature of, 19–23 preventive maintenance of, 564 quiet enjoyment of, 579 residential, 560 “subject to” the existing loan, 233 property acquisition, initial investment in, 487 property management, 561 property management agreements, 566–568 contents of, 566 property managers, 556, 561 collecting rent, 562 communicating with owners, 563 complying with landlord-tenant laws, 562–563 functions of, 557–566 maintaining tenant relations, 563 marketing the property, 557–559 leasing the property, 557–559 owners as, 556–557 repairing and maintaining the premises, 564–566 corrective maintenance, 564 custodial maintenance, 564 deferred maintenance, 564 maintenance as an investment decision, 564–566 preventive maintenance, 564 selecting tenants, 559–561 creditworthiness, 559–560 residential properties, 560 tenant mix, 560 signing leases, 561–562 top third-party, 562 property markets, 9, 11 property owners communicating with, 563 as managers, 556–557 property rights, 20 as enduring, 20 nature of, 19–22 nonrevocability of, 19 vs personal rights, 20, 20 protesting, 22 real estate as, of real property, 21, 21, 23–32 restrictions on, 22 property tax lien, 31 proprietary lease, 36n19 pro rata share, 490 prorating, 367 proxy variables as market analysis techniques, 134 Pruitt-Igoe public housing project, 100 psychographics, 154 public debt, in capital markets, 9, 10 public equity, in capital markets, 9, 10 public planning, for land use control administration of, 79–80 challenges in, 75 comprehensive, 74 public purpose, 85 public real estate markets, 473–475 public records comparable sales data in, 170 real property placed in, 54–55 public use, 85–86 Publix, 559 purchase-money mortgage (PMM), 254–255 Q Qualified Mortgage, 262 Qualified Mortgages standard, 238 quality of life and leadership, 106 quiet enjoyment of the property, 579 Quigley, John, 22 quitclaim deed, 49 R radon, 82 range lines, 63, 63 Rapanos, John, 84 rate caps, 221 for ARM loans, 423–425, 424 rate lock agreement, 446 rate of return in time value of money, 399–400 raw land, Real Capital Analytics, 201 Stt.010.Mssv.BKD002ac.email.ninhd 77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77t@edu.gmail.com.vn.bkc19134.hmu.edu.vn.Stt.010.Mssv.BKD002ac.email.ninhddtt@edu.gmail.com.vn.bkc19134.hmu.edu.vn C.33.44.55.54.78.65.5.43.22.2.4 22.Tai lieu Luan 66.55.77.99 van Luan an.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.33.44.55.54.78.655.43.22.2.4.55.22 Do an.Tai lieu Luan van Luan an Do an.Tai lieu Luan van Luan an Do an www.downloadslide.com 662 Index real estate defined, economy and, 5–7 heterogeneous nature of, 13 immobility of, 13 as industry, institutional-grade, 14 market misjudgments in, 100 markets and participants, 7–12 nature of, overview, 1–2 as profession, as rights, 4, 19 tangible asset, 2–4 and U.S wealth, 6–7, valuation of, market characteristics in, 161 real estate agency relationships and disclosures, 310–312 real estate agents, 309–310 See also real estate brokers designated, 311 dual agency, 309–310 general, 308 special, 308 subagency, 309 traditional agency relationships, 310 types of, 308 universal, 308 real estate appraisers, 162 real estate assets, managing corporate, 573–574 real estate attorneys, 232, 372, 373 real estate brokerage firms commercial brokerage, 316–317 international aspects of brokerage, 321 market segmentation, 316 residential brokerage, 317–320 specialization and service, 316 real estate brokers, 317 See also real estate agents brokerage licensing administration, 314 in closing, 363 economic rationale for employing, 306–307 facilitating, 312 intermediary, 312 license law infractions, 315 licensing of, 313–315 marketing function, 316–321 commercial brokerage, 316–317 international aspects of brokerage, 321 market segmentation and specialization and service, 316 residential brokerage, 317–320 real estate brokers—Cont real estate license, obtaining, 314–315 exemptions, 314–315 experience requirements, 314 general requirements, 315 transaction, 312–313 transactions with and without, 307 real estate brokers as market facilitators, 306 real estate business brokerage and, 306–307 real estate commission, 314 real estate counselors, 488 real estate cycles market projections and, 151–152 real estate debt without a mortgage, 234–235 real estate decisions role of urban analysis in, 123–124 real estate development projects, 153 Real Estate Exchange, 318 real estate investment trusts (REITs), 192, 458, 468–470, 556, 571 historical stock offerings and total market capitalization of listed, 474 income, measuring, 476–477 investment performance, 478, 478–479 management, 476 mutual funds and, 470 nonlisted, 470 private, 470 securities offerings by, 475 valuation, 477–478 real estate investors, environmental hazards and, 83 real estate license exemptions, 314–315 experience requirements, 315 general requirements, 315 Real Estate Market Analysis: A Case Study Approach (Schmitz and Brett), 132n3 real estate market research as storytelling, 131–133 real estate private equity funds, 466–467 real estate professionals, 573 real estate property acquiring with an existing debt, 233–234 corrective maintenance of, 564 custodial maintenance of, 564 decision to improve or alter, 571–573 deferred maintenance of, 564 description of, 225 leasing, 557–559 real estate property—Cont marketing, 557 preventive maintenance of, 564 quiet enjoyment of, 579 “subject to” the existing loan, 233 Real Estate Report, 201, 403, 403 Real Estate Research Corporation (RERC), 201, 403 real estate sales associates, 587 real estate sales brokers, 587 real estate salespersons, 317 Real Estate Settlement Procedures Act (RESPA), 237, 364 real estate valuation market segmentation, 131 slipperiest step in, 130–131 real property, 4, 20 assessed value of, 90–91 classes of, 525–526 dealer property, 525 fixtures as, 22–23 investment property, 525 modes of conveyance, 50–54, 51 personal residence, 525 restrictions on ownership, 94 rights of, 21, 21, 23–32 taxable value of, 90–91 tax-exempt, 90 trade or business property, 525 Real Property Administrator (RPA), 569 real property tax ad valorem, 88–89 in adverse possession, 54 calculating, 90–91 in closing costs, 368 in comparable sales data, 170 criticisms of, 93–94 exemption from, 90 government power over, 88–89 homestead exemption for, 90 jurisdiction over, 89–90 lien for, 31 mechanics of, 89–93 nonpayment of, 92–93 poor administration of, 94 prorating, 367 as regressive, 93 special assessments, 91–92 tax rate effective, 91 millage, 90 reconciliation, 168 reconstructed operating statement, 194, 194 recording statutes, 54–55 recourse loans, 224 recovery fund, 315 redlining, 239 Stt.010.Mssv.BKD002ac.email.ninhd 77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77t@edu.gmail.com.vn.bkc19134.hmu.edu.vn.Stt.010.Mssv.BKD002ac.email.ninhddtt@edu.gmail.com.vn.bkc19134.hmu.edu.vn C.33.44.55.54.78.65.5.43.22.2.4 22.Tai lieu Luan 66.55.77.99 van Luan an.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.33.44.55.54.78.655.43.22.2.4.55.22 Do an.Tai lieu Luan van Luan an Do an.Tai lieu Luan van Luan an Do an www.downloadslide.com 663 Index refinancing, decision about, 264–267 refinement, of project, 607–608 regional shopping center, 595 regulation, of home mortgage lending, 236–239 regulatory taking, 86–88 rehabilitation, 571 reinvestment risk, 435 REIT IPO market, 474 relationships, in defining fixtures, 23 release of liability, 233 reliction, 54 relocation options, 586 remainder estate, 25 remainder state, 24 remodeling, 571 renewal options, 585 rent base, 582 collecting, 562 contract, 195 effective, 587–589 flat, 581 graduated, 581–582 market, 195 percentage, 582 property managers and, 562 user markets in determining, 11 rentable area, 592 rentable/usable ratio, 592 rental growth rate, 489 rental payments, 581–582 flat rent, 581 graduated rent, 581 percentage rent, 582 rental real estate operational management of, 622–623 required returns, determining, 402, 402–403, 403 rescind, 236 rescission, 362 residential appraisers, 193 residential brokerage, 317–318 residential lending, 224 residential market, segmentation of, 14 residential mortgages, 223n8 See also mortgage(s) Fannie Mae, 288–289 Federal Home Loan Banks, 291–292 Freddie Mac, 289 Ginnie Mae (GNMA), 287–288 private conduits, 291 purchasers in the secondary market, 287–292 secondary market for, 284–285 secondary market purchasers, 292 states having power of sale for, 231 residential properties, 560 appraisal of, 167, 168 comparable sales data for, 169 residential rental properties common lease provisions of, 590–591 condition of premises, 591 and leases, 589–591 lease term, 591 rules and regulations, 591 utilities, 591 restricted appraisal report, 168 restrictive covenants, 30–31 retailing, new forms of, 118–119 retail properties common lease provisions of, 596–598 common area maintenance, 598 co-tenancy clause, 597–598 hours of operation, 598 percentage rent clause, 596–597 use clauses, 597 defining leasable area in, 596 and leases, 594–598 returns effect of taxes on, 546–547 reuse, asset management and, 573 revenue, trends in, 489 reverse mortgage loans, 256–258, 257, 258 reversion, 206 rezoning, 80 Riegle Community Development and Regulatory Improvement Act, 278n6 right of first refusal, 586 right of prepayment, 222–223 right of survivorship, 35 right(s) nature of, 19–22 as nonrevocable, 19 personal, 20, 20 real estate as, 4, 19 risk, 385 fallout, 280 in future value, 385 interest rate, 280 interlease, 588 leverage impact on, 512–515, 513 pipeline, 280–281 with rate caps, 424–425 reinvestment, 435 spectrum of, 400, 401 value and, 400–402 Rockefeller Center, 607 root of title, 59 rule of capture, 41 S safety codes, 77 sale estimation, 539–548 adjusted basis, 539–540 complications caused by alternative ownership forms, 547–548 corporate tax rates, 542–543 effect of taxes on values and returns, 546–547 net benefits of tax depreciation, 545–546 Section 1231 property, 543–544 taxable gain or loss, 540 taxation of income from a fully taxable sale, 541–542 taxes due on sale, 544–545 types of income generated by a sale, 541 sale-leasebacks, 437 sale listing agreement, exclusive right of, 329–334 sales, designations in, 315–316 sales comparison approach to appraisal, 167, 169 adjustments to transaction prices in, 170–175, 176, 177 comparable properties in, 168–169 comparable sales data in, 169–170, 175–176, 176–177 salespersons license, 313 licensing of, 313–315 sanitation codes, 77 Schmitz, Adrienne, 132n3 scope, in appraisal, 165 Sears, 155 secondary activities, 104 See also local economic activities secondary market purchasers of residential mortgages in, 287–292 for residential mortgages, 284–285 secondary mortgage market, 245–246 second mortgage, 438–439 Section 199, 252 Section 203 loans, 252 Section 1231 property, 543–544 sections, 61, 63, 63–64, 64 sector model of urban form, 114–117, 117 securities mortgage-backed, 285–287 securitized investments, 465 securitizing loans pooling and, 281 segmentation, of real estate markets, 14 self-contained appraisal report, 168 self-storage facilities, 100 Stt.010.Mssv.BKD002ac.email.ninhd 77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77t@edu.gmail.com.vn.bkc19134.hmu.edu.vn.Stt.010.Mssv.BKD002ac.email.ninhddtt@edu.gmail.com.vn.bkc19134.hmu.edu.vn C.33.44.55.54.78.65.5.43.22.2.4 22.Tai lieu Luan 66.55.77.99 van Luan an.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.33.44.55.54.78.655.43.22.2.4.55.22 Do an.Tai lieu Luan van Luan an Do an.Tai lieu Luan van Luan an Do an www.downloadslide.com 664 Index seller rights and obligations of, 340 steps before closing, 372 selling expenses (SE), 207 selling price market value as, 163 Senior Residential Appraiser (SRA), 162 separate accounts, 466 separate property, 38 services, convenience, 120–121 servient parcel, 27 settlement, procedures for, 364 shale gas leases, 40 shopping centers community, 595 gross floor area of, 596 leases, 599 neighborhood, 595 power, 595 regional, 595 specialty, 595 short sale, 228 signage, 586 The Silent Spring (Carson), 75, 75n3 Simon, Robert, 100 Simon Property Group (SPG), 192 market value of, 161 single agency, 309 site control, establishing, 606–607 site plan review, 80 skyscrapers, smart growth, 75 Society of Industrial and Office Realtors, 318 soft costs, 615 soils engineer, 614 Sony, 276 special agent, 308 special assessments, 91–92 specialty shopping center, 595 special use classification, in zoning, 78 special warranty deed, 49 specific lien, 31 specific performance, 362 spouses, in tenancy by entirety, 35 spreadsheets, for future valuation, 388 Standard and Poor’s, 559 standard sale timeline vs contract for deed timeline, 235 Standards for Real Estate Transactions, 361 Staples, 155 state, comprehensive planning for, 74 state-based landlord-tenant laws, 563 state government in comprehensive planning, 74 eminent domain of, 83 role in real estate market, 10 statement of condition, 591 Statute of Frauds, 54, 342–343, 343n3 statutory right of redemption, 230 Stevens, John Paul, on eminent domain, 87 storytelling real estate market research as, 131–133 structural engineer, 614 structural standards, in building codes, 77 structures, incomplete information on, 72 subagency, 313, 309 subchapter S corporation, 460, 460n5 subcontractors, 618 subdivisions dedication in, 53 deed restrictions in, 30–31 platted, 61, 62 regulation of, 79 subject property, 161 sublease, 584 subletting, 584–585 submarkets, 316 subordination, 587 subordination agreement, 617 subprime lending, 300–301 subprime loans, 223, 261, 300 thoughtlessness of, 14 subsurface, property rights of, 21, 21, 41 suburban retail centers, 156 summary appraisal report, 168 Superfund, 82, 83 superregional malls, 595 Supreme Court on eminent domain, 85–86 on wetlands regulation, 84 on zoning, 88 surveying, in metes and bounds, 59–60 survey research, 155–156 Susette Kelo v City of New London, Connecticut, 87 sustainability standards, 77 syndicate, 465 T taking, under eminent domain, 86–88 tangible assets, 2–4 Target, 155 tax factors affecting homeowners, 548–550 taxable gain, 540 taxable loss, 540 taxable value, 89–91 tax assessor, 90–91 taxation income subject to, 526–527 tax base, 89 tax credits, 535–536 tax deductions for home equity loan interest, 256 tax depreciation net benefits of, 545–546 taxes ad valorem, 88–89 effect on IRR, 516, 516–517 effect on NPV, 516, 516–517 income taxes in investment decisions, 490–491 and investor cash flows, 515–517 in refinancing, 265–266 jurisdictions over, 89–90 taxes from operations, 536–538 tax-exempt properties, 90 tax liabilities cash calculation vs tax calculation, 529 costs of mortgage financing, 530 depreciation deductions, 531–535 cost recovery period, 533 depreciable basis, 531–533 methods of depreciation, 533–535 substantial improvements, 535 estimating from operations, 528–535 estimating from sale, 539–548 adjusted basis, 539–540 complications caused by alternative ownership forms, 547–548 corporate tax rates, 542–543 effect of taxes on values and returns, 546–547 net benefits of tax depreciation, 545–546 Section 1231 property, 543–544 taxable gain or loss, 540 taxation of income from a fully taxable sale, 541–542 taxes due on sale, 544–545 types of income generated by a sale, 541 like-kind exchange, 548 low-income housing, 536 operating expenses vs capital improvements, 530 tax credits, 535–536 taxes from operations, 536–538 tax shelter, 538–539 tax rate effective, 91 millage, 90 tax revenues, uses of, 85, 89 tax shelter, 538–539 Stt.010.Mssv.BKD002ac.email.ninhd 77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77t@edu.gmail.com.vn.bkc19134.hmu.edu.vn.Stt.010.Mssv.BKD002ac.email.ninhddtt@edu.gmail.com.vn.bkc19134.hmu.edu.vn C.33.44.55.54.78.65.5.43.22.2.4 22.Tai lieu Luan 66.55.77.99 van Luan an.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.33.44.55.54.78.655.43.22.2.4.55.22 Do an.Tai lieu Luan van Luan an Do an.Tai lieu Luan van Luan an Do an www.downloadslide.com 665 Index teaser rates, 221, 421, 421–422 technical defaults, 227 technology air-conditioning, lighting, and new forms of retailing and offices, 118–119 change in the 20th century, 117–119 data processing and communications, advances in, 119 production revolution, 118 urban transportation revolution, 118 tenancy joint, 34, 35 periodic, 24, 26 tenancy at sufferance, 24, 26 tenancy at will, 24, 26 tenancy by the entirety, 34, 35 tenancy for years, 24, 26 tenancy in common, 34, 34–35 tenancy-in-common (TIC), 461, 462 tenant improvement (TI) allowance, 580 tenant mix, 560 tenant property, fixtures as, 23 tenant relations maintaining, 563 tenant reps, 558 tenant(s) anchor, 596 credit, 559 property rights of, 23 responsibility for operating expenses, 582 selecting, 559–561 term, in real estate loans, 222 term for amortization, 222 terminal capitalization rate (Rt), 206 terminal value (Vt), 206 termination, of listing contract, 325 term to maturity, 222 testate, 51 testing, of project, 607–608 Texas bankruptcy in, homestead protection from, 32, 32n13 zoning in, 72 thrifts, 275 demise of, 276–278 tier lines, 63, 63 time, in future value, 385 time limits, in contract for sale, 346 timesharing, 38–39 time value of money (TVM), 385 compounding operations, 388–393, 389 discounting operations, 393–399 explanation of, 385–386 rates of return in, 399–400 required returns, determining, 402, 402–403, 403 terminology used for, 387 timeline in, 386, 386 yields in, 399–400 timing of construction expenditures, 625 title, 56 conveyance of, in contract for sale, 361 equitable, 343 evidence of, 55–59, 56 legal, 343 marketable, 50, 58–59, 59n9 root of, 59 title abstract, 56 title abstract with attorney’s opinion, 57 title examiners, 59 title insurance, 50, 57 in closing costs, 368–372 controversy over, 58 limitations of, 57 obtaining, 372 title insurance commitment, 57–58 title researchers, 59 title search, 56 scope of, 58–59 title theory, 225 lien theory and, 225n10 Title VIII of the Civil Rights Act, 318 Torrens certificate, 58 Toshiba, 276 tourism, 104 townships, 61–63 toxic waste, 82 Toyota, 276 Toyota Motor Sales South Campus Office Development, Torrance, California, 620 trade fixtures, 23, 584 traditional agency relationships, 310 traditional home mortgage underwriting, 296–297 capacity (ability to pay), 296–297 collateral, 296 creditworthiness, 296 transaction arm’s-length, 169 complexity of, 14 cost of, 14 transaction-based commissions, 224 transaction broker, 312 transaction brokers, 312–313 transaction prices, 163 trustee, 226 trustee’s deed, 50 Truth-in-Lending Act (TILA), 236, 414 typical development sequence, 623 U umbrella partnership REIT (UPREIT), 476 underwriting failures, 299 undue influence, 342, 342n2 Uniform Probate Code (UPC), 51 Uniform Residential Appraisal Report (URAR), 168 Uniform Residential Landlord and Tenant Act (URLTA), 563n2 Uniform Standards of Professional Appraisal Practice (USPAP), 163 unintended dual agency, 311 unintentional dual agency, 312 United States Green Building Council (USGBC), 620 United States tax law objectives and implementation of, 524 taxation of individuals and corporations, 524 universal agent, 308 unlevered cash flow, 506–507, 507n2 up-front costs, and effective borrowing cost, 416–418 up-front mortgage insurance premium (UFMIP), 251, 252 urban analysis role in real estate decisions, 123–124 urban form combined effects on, 119–120 concentric ring model of, 113–114 sector model of, 114–117 urban growth agglomeration economies, 107–108 industry economies of scale, 107 labor force characteristics, 106 quality of life and leadership, 106 supply side of, 106–108 urbanism, new, 76 Urban Land Institute (ULI), 198, 590 urban land uses bid-rent curves and, 113 location patterns of, 120–123 comparison goods and clustering, 121 convenience “goods” and central place patterns, 120–121 industry economies of scale and clustering, 121–123 urban planning, smart growth in, 75 urban service areas, 74 urban service boundary, 401 urban sprawl, 71–72 urban systems, performance standards for, 81 urban transportation revolution, 118 usable area, 592 Stt.010.Mssv.BKD002ac.email.ninhd 77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77t@edu.gmail.com.vn.bkc19134.hmu.edu.vn.Stt.010.Mssv.BKD002ac.email.ninhddtt@edu.gmail.com.vn.bkc19134.hmu.edu.vn C.33.44.55.54.78.65.5.43.22.2.4 22.Tai lieu Luan 66.55.77.99 van Luan an.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.33.44.55.54.78.655.43.22.2.4.55.22 Do an.Tai lieu Luan van Luan an Do an.Tai lieu Luan van Luan an Do an Stt.010.Mssv.BKD002ac.email.ninhd 77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77t@edu.gmail.com.vn.bkc19134.hmu.edu.vn.Stt.010.Mssv.BKD002ac.email.ninhddtt@edu.gmail.com.vn.bkc19134.hmu.edu.vn