The document provides an overview of real estate principles, including definitions of key terms such as vendor, agent, and end user, as well as the various types of land value like market value and assessed value. It discusses the unique characteristics of land, the process of land acquisition, and the importance of utilities in real estate. Additionally, it differentiates between value, price, and cost in the context of real estate transactions.
The document provides an overview of real estate principles, including definitions of key terms such as vendor, agent, and end user, as well as the various types of land value like market value and assessed value. It discusses the unique characteristics of land, the process of land acquisition, and the importance of utilities in real estate. Additionally, it differentiates between value, price, and cost in the context of real estate transactions.
The document provides an overview of real estate principles, including definitions of key terms such as vendor, agent, and end user, as well as the various types of land value like market value and assessed value. It discusses the unique characteristics of land, the process of land acquisition, and the importance of utilities in real estate. Additionally, it differentiates between value, price, and cost in the context of real estate transactions.
The document provides an overview of real estate principles, including definitions of key terms such as vendor, agent, and end user, as well as the various types of land value like market value and assessed value. It discusses the unique characteristics of land, the process of land acquisition, and the importance of utilities in real estate. Additionally, it differentiates between value, price, and cost in the context of real estate transactions.
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Principles
of Real Estate
Dr. Amanat Ullah
What is Real Estate ? The Value of Real Estate The Ownership of Real Estate Purchase and Sale of the Real Estate Real Estate Law and Property Rights What is The Value of Real Estate?
Value • Vendor • Agent • Land acquisition • Utilities • End user The Vendor
• A person, group, company, machine, firm or the
government offering something for sale with market value / price to another person, group, company, machine, firm, organization, government or end user known as vendor. The Agent
• A person, group, company, machine who acts on behalf of another
person group, company, machine or group. • A person who works secretly to obtain information for a government or other official body. • A person or thing that takes an active role or produces a specified effect. • An agency relationship is established when one party (agent) is authorized by another party (principal) to act on his/ her behalf. Such relationships are initiated when one party desires to extend his/her activities beyond his/her present limits or capacity. In modern life, it would be virtually impossible for a business to function efficiently without agents The Land Acquisition
• Land acquisition refers to the process of right by
the state government in acquires private land for the purpose of industrialisation, development of infrastructural facilities or urbanisation of the private land, and provides compensation to the affected land owners and their rehabilitation and resettlement known as land acquisition The Utilities
• The utilise of land with the permission of the government to develop
facilities for private, public or commercial • The utilities of home: states being useful facilities or benefits of the features at the home such as electricity, gas, water, cable and telephone etc, recognized as utilities • The utilities of land: states the utility value of land use is a measurement unit of the value of a specific land use zone in relation to the whole economic system. It is the effective economic output value of land use and it is defined according to concepts of accessibility level, economic level and spatial interactions. Land is Unique
• In Location and it’s Composition
• Physically Immobile • Durable • Supply is finite • Useful to People
8 The End User • The end user is the final consumer of a product or service. They represent the end of the distribution channel. They are not to be confused with the people who purchase or order a product. • An end user is a person (consumer) who ultimately uses or is intended to ultimately use a product and pay value to the Vendor. • The end user stands to the final users who support or maintain the product or services. Types of Land Value • The purpose establishes the foundation for the final value opinion. Some examples are: • Market Value • Insurable Value • Assessed Value • Use Value • Investment Value 10 Market Value • The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby Market Value • 1. Buyer and seller are typically motivated; • 2. Both parties are well informed or well advised, and acting in what they consider their best interests; • 3. A reasonable time is allowed for exposure in the open market; • 4. Payment is made in terms of cash or credit in terms of financial arrangements; International Market Value
• Market value is the estimated amount for which a
property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after property marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion. Insurable value
• Replacement cost or actual cash value of a building for
which standard insurance policies provide indemnity cover. Insurable value is less than the property's appraised or market value because it excludes the value of land on which the building stands. Assessed Value
• Assessed valuation determines the value of a residence
for tax purposes and takes comparable home sales and inspections into consideration. It is the price placed on a home by the corresponding government municipality to calculate property taxes. • The value of location of the property. Use Value
• The use value of a commercial property using the
Gross Rent Multiplier approach to valuation, simply multiply the Gross Rent Multiplier (GRM) by the gross rents of the property. To calculate the Gross Rent Multiplier, divide the selling price or value of a property by the subject's property's gross rents Investment Value
• Investment value. Investment value is the value of
a property to a particular investor. It is equal to market value for the investor who has the capacity to put the property to good use—its highest-and-best-use, its most valuable use. Value, Price and Cost • Value • The monetary worth of a property, good or service to buyers and sellers at a given time. The present worth of future benefits that accrue to real property ownership. • Price • The amount a particular purchaser agrees to pay and a particular seller agrees to accept under the circumstances surrounding their transaction. • Cost • The total money expenditure for an improvement (structure). 18 s ? io n es t Q u n y e a e r e th A r • Reference
1. Alonso, W. (1960) A Theory of the Urban Land Market, Papers and
Proceeding, Regional Science Association 6, pp. 149-158. 2. Pryor, E.G. (1987) "Land Use-Transport Strategy Formulation in Hong Kong", Land Use Policy (July), pp. 257-279. 3. Jeffers, J. (1988) "Decision-Thinking about Land Use", Land Use Policy, January, pp. 75-78.
