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Definition
| Direct effect on value of property, MUST LEGALLY DISCLOSE, (ex. leak in the roof, bad furnace) |
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| No effect on value, reason for sale NOT legally required to disclose (ex. foreclosure, divorce) |
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| One to four family dwellings |
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Term
| Seller's Disclosure Statement |
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Definition
| Forms that state the condition of a property Must be presented to buyer before purchase agreement is signed (if not buyer can back out of deal any time)Must be available to the public. |
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| hidden defect. LEGALLY MUST BE DISCLOSED. (ex. leak from wall that isn't seen due to freezing in the winter) |
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| Any defect that can be found during inspection |
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Term
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Value of property for tax purposes
Assessed Value = Appraised value X Assessment rate (50% in MI)
80,000 X 50% = 40,000 |
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Term
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Definition
ratio between assessed value and appraised value (MI is 50%)
Assessment Rate = Assessed Value / Appraised value
ex. = (40,000 / 80,000 = .5 (50%)) |
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Term
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Definition
| (Tax rate) One MILL= One tenth of a cent per dollar of ASSESSED VALUE. Ex: 50 MILLS= 50/1000=.05=50%=5$ (move the decimal place left one place 75 MILLS=7.50% Ex 2: ASSESSMENT Rate=50% (MI) APPRAISED VALUE =$60,000 ASSESSED VALUE =$30,000 |
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| Principal Residence Exemption (PRE) |
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Definition
| 18 MILL discount for principle residences of actual owner |
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Definition
| charges for improvements made by local government (paved roads, utilities) |
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Term
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Definition
ASSESSED VALUE = A
Tax Rate = B
Taxes Due= C
A X B = C
C /B = A
C / A = B
ex. Assessed value = 40,000
Tax rate = 6%
Tax Due = 2,400
40,000 X 6% = 2,400
2,400 / 6% = 40,000
2,400 / 40,000 = .06 (6%)
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Term
| Using Appraised Values to calculate Taxes |
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Definition
ex. Appraised Value = 80,000, Tax rate = 6% how much taxes are owed?
Step 1: Appraised value X State Assessment rate = Assessment Value
(80,000 X 50% (MI) = 40,000)
Step 2: Assessment Value X Tax rate = Tax Due
(40,000 X 6% = 2,400)
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Term
| Appraised Value Calculations |
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Definition
Assessed value = A
Assessment Rate = B
Appraised value = C
A / B = C
A / C = B
B X C = A
ex. Assessed Value = 40,000
Assessment rate = 50% (MI)
Appraised value = 80,000
40,000 / 50% = 80,000
40,000 / 80,000 = .5 (50%)
80,000 X 50% = 40,000
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Term
| Using Millage to calculate Appraised Value |
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Definition
Ex. Taxes Due = 2,000
tax rate= 40 MILLS
Appraised Value = ?
(remember 40 MILLS = 4%, just move the decimal place one left)
Taxes due / tax rate = Assessed value
Assessed value / assessment rate = appraised value
Step 1. 2,000 / 4% = 50,000
Step 2. 50,000 / 50% (MI) = 100,000 |
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Term
| Deed Restrictions and Covenants |
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Definition
Deed restrictions: placed by seller on property and caies on to future land use
Covenant: Placed by land subdividers to restrict use
Which ever is more strict wins out! Including zoing ordinances |
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Term
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Definition
Physical description of property location (not an address)
Metes and Bounds
Lot-Block Subdivision Method
Government Survey System |
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Term
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Definition
Property desription through series of distances and measurements.
1. Always starts at the POINT OF BEGINNING and always ends there too
2. Use a monument that is easily identifiable (Tree, stream, fence, etc.)
3. Use a PERMANENT REFERENCE (corner of two streets or bridge) to establish P.O.B. (1.)
4. Angular measurements are given in degrees
[image]
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Term
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Definition
Developer acquires raw land and designates a block and divides this into lots. This is submitted to the planing commission.Plat map is filed with county register of deeds.
[image] |
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Term
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Definition
Grid system using:
1. Base Lines: Imginary line (East-west) every 24 miles (detroit is 8 mile)
2. Principal Meridian: Imaginary Line (North-South) every 24 miles
3. Township Lines: Imaginary Lines (east-West) every 6 miles
4. Range Lines: Imaginary Lines (North-South) every 6 miles
5. A Township: the 6 suare mile block that is created by Township lines and range lines intersecting
6. Tier: Line/group of townships (East-West)
7. The Range: Line/group of townships (North-South)
- Each township is 36 suare miles or SECTIONS
- Each SECTION if 640 Acres and numbered 1-36
- Acre = 43,560 Sq Feet
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Term
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Definition
| ratio between building size and parcel size. |
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Definition
| "Right of Way" the right to use a part or all of the property. |
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Term
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Definition
Two estates are involved in an easement appurtenant:
Dominant Tenant: Neighboor
Dominant Estate: Neighboors property
Servient Tenant: Land Owner
Servient Estate: Land being altered |
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Definition
Right of way
Ingress (enter) and Egress (Exit) |
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Term
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Definition
Benefits a neighbor,
passes with the land
Dominant Estate: Neighbor (benfitor)
Dominant Tenant: Neighbor (person)
Servient Estate: Land being altered
Servient Tenant: Owner of land |
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Term
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Definition
may/may not run with land
belongs to person, not neighbor (land) |
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Term
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Definition
Grant: Document
Reservation: with hold right to use during sale of property
Necessity: court-ordered
gov. condemnation: gov obtained
prescription: trespass (15 years) |
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Term
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Definition
gas, electric, water, sewer, etc.
can become lean
amounts owed must be paid by seller before sale |
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Term
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Definition
becomes a burden and can diminish value of property
lean, mortgage, taxes, easements, etc. |
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Term
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Definition
Public Notice: recording of deed at "register of deeds" office
Actual Notice: evidence of ownership |
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Term
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Definition
Location: Supply and demand, market trends
Changes: known to the community, ex: new landfill.
Depreciation: loss over time
Improvements: land or physical
Economic Trends: economic changes |
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Term
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Definition
Physical: Wear-and-tear
functional: outdated
external: society, noise, pollution
Curable: Can be corrected
Incurable: Cannot be corrrected |
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Term
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Definition
Appraisal Report: Performed by a Licensed Appraiser, used for banks to issue loans
Market Value: "Listing price" reasonable
Arms Length Trascation: Fair sale
Market Price: Selling price
Conformity: Neighborhood location
Contribution: Addding value (vacant lots)
Assemblage: merger of land
Substitution: Comparable property
highest and best use: converting buildings/land for better use |
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Term
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Definition
"Market Data Approach"
comparing 3-4 similar properties to the one for sale. Adding and subtracting value for features (good or bad) |
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Term
| Cost Approach (determining Value) |
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Definition
New Properties, such as schools and libraries.
value of land alone + Value of building
Value of Building: Sq. foot method: Exterior dimensions X cost per sq. foot to replace
Accrued depreciation= value currently - cost to replace or replicate exactly |
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Term
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Definition
Value = NOI / CAP Rate%
NOI (net operating income) = rent - expenses
rent = income - vacancy loss + additional income
Expenses = costs (taxes, maint., insurance, utilities)
Loan Payments are not considered Expenses
Cap Rate% = Capitalization rate of return
NOI = Rent - expenses
Investor will pay X? if Cap rate= 15%, rent = 26000 expenses = 40%
X= (26000-40%)/15% or .15 = 104000$ |
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Term
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Definition
Value= GRM X Rent
A: sold for 250000, rent = 10000/year
B: Sell for ? , rent = 15000
250000 /10000 = 25 (GRM)
25 X 15000 = 375000$ |
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Term
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Definition
| value of property by Real Estate Agent |
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Term
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Definition
Real vs. Personal (Chattel)
Real: Land, improvements, plants, air space, water, sub-surface
Chattel: Moveable
Fixtures: Once were chattel but are now permanently attached.
Severance: Detaching a fixture |
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Term
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Definition
Riparian Rights: living next to a stream, right to reasonable use
Littoral Rights: Next to large lakes or oceans, own land up to waters edge
-erosion: water wearing away at land
- accretion: water depositing soil into more land
- reliction: land exposed due to permanent water recession |
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Term
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Definition
Desirability (Demand) do people want or can they buy
Scarcity (Supply) are there houses to sell
Utility - is it suitable for the needs of the buyer
Transferability- is it easily sold |
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Term
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Definition
Durability: depreciation, land does not depreciate
Immobility: real estate is not moveable
Hetrogeneity: All is unique |
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