There are many different types of loans available to consumers with various terms dependent upon what type of property you are financing and for how long. Some of these different loans include a Conventional Mortgage, an Adjustable-Rate Mortgage (ARM), an Assumable Mortgage, a Balloon Mortgage, and a Veteran Affairs Mortgage. A Conventional Mortgage has a fixed interest rate and are generally financed over a period of 10, 15 or 30 years. In an Adjustable-Rate Mortgage, also known as a Variable or Floating-Rate Mortgage, the initial interest rate is normally fixed for a period of time, then adjusts periodically to a specific benchmark. An Assumable Mortgage is a financing arrangement where the outstanding mortgage on a property can be transferred from the current owner to the buyer, which prevents the buyer from having to obtain his or her own mortgage. A Balloon Mortgage is a short term mortgage that requires borrowers to make regular payments for a specific time period, then payoff the remaining balance. Veteran Affairs Mortgages provide benefits to veterans and active duty military, such as requiring no down payment on loans up to $200,000. Specifics regarding VA Loans can be found by clicking on the following link:
http://www.freddiemac.com/sell/factsheets/va_morts.htm
Capital for real estate can be obtained from many different sources. These include individual investors, Pension Funds, Life Insurance Companies, Real Estate Investment Trusts (REITs), and most commonly Commercial Banks. Each of these obtain capital for their real estate investments using various methods. For example, life insurance companies use premiums from their policies to invest in real estate, while REITs sell shares of stock to smaller investors and use the capital gained for their investments. There are many ways to get creative with real estate financing. One such creative concept, known as Free and Clear Real Estate Investing, proposes making only prinipal payments and avoiding interest payments. This is attractive to both the borrower and the lender, because the borrower is buying equity with each payment and every payment received by the lender is pocketed rather than having to pay tax on interest. This concept is explained in the following YouTube clip:
http://www.youtube.com/watch?v=ROzo5xjW2GI
Thursday, December 6, 2012
Overview of Real Estate Finance
The major employers related to real estate finance are banks, insurance companies, mortgage companies, and investment firms. There are numerous career opportunities associated with real estate finance. These careers include Residential Mortgage Loan Officer, Residential and Commercial Development Finance, Corporate Real Estate Management, and Investment Analyst. A Residential Mortgage Loan Officer is responsible for selling, packaging, and closing residential mortgage loans. Professionals in Residential and Commercial Development Finance use financial and analytical skills to research local trends and financing for developers and development lenders. Professionals in Corporate Real Estate Management provide critical financial recommendations and expertise in analyzing costs and expenditures, structuring deals, setting prices to purchase land, etc. Most corporate real estate professionals start out in commercial banking and lending, then advance into corporate real estate portfolio management. Investment Analysts assess, review, and provide financial reports on a corporation's real estate portfolio and investment. They continually provide reports on the performance of a company's real estate investments. Below is a link providing more detailed information about these careers:
http://www.ehow.com/list_6496787_careers-real-estate-finance.html
Real estate finance trade organizations are formed to bring together the best professionals, knowledge, and experience to provide informative programs and networking opportunities for real estate finance professionals. One such example of a real estate finance trade organization is the Real Estate Finance Association (REFA) of Greater Boston. The link to REFA's website is provided below:
http://www.gbreb.com/refa.aspx
Real estate financial markets are performing well and beginning to make a resurgence, as we are recovering from the recent subprime mortgage crisis. Real estate finance will always be needed and play a critical role in our economy, as financing will always be needed for consumers for homes and businesses for expansion and investments. However, foreclosures are still an issue that real estate finance companies need to protect themselves against. They can do this by enforcing strict financial analysis of potential clients, through covenants included in real estate loans, etc.
http://www.ehow.com/list_6496787_careers-real-estate-finance.html
Real estate finance trade organizations are formed to bring together the best professionals, knowledge, and experience to provide informative programs and networking opportunities for real estate finance professionals. One such example of a real estate finance trade organization is the Real Estate Finance Association (REFA) of Greater Boston. The link to REFA's website is provided below:
http://www.gbreb.com/refa.aspx
Real estate financial markets are performing well and beginning to make a resurgence, as we are recovering from the recent subprime mortgage crisis. Real estate finance will always be needed and play a critical role in our economy, as financing will always be needed for consumers for homes and businesses for expansion and investments. However, foreclosures are still an issue that real estate finance companies need to protect themselves against. They can do this by enforcing strict financial analysis of potential clients, through covenants included in real estate loans, etc.
Overview of a Real Estate Appraisal
Real estate appraisal, also known as property valuation or land valuation, is the process of valuing real property. Appraisals are needed in any real estate transaction, whether purchasing or selling a property, to properly determine the property's value. There are three different types of appraisals: Appraisal with Self-Contained Report, Appraisal with Summary Report, and Appraisal with Restricted Use Report. Appraisal with Self-Contained Report is the most complete report available. It contains a full reporting of the appraisal process, complete details on comparable data, area and market analysis, etc. It is the most time-consuming to complete and so has the highest appraisal fee. Appraisal with Summary Report is the most common appraisal assignment. It involves a documented narrative or multi-page form report with an adequate explanation of the appraisal procedure and data used in the valuation. Appraisal with Restricted Use Report is an abbreviated report. The report is a brief letter with no supporting data included. It is not designed for use by third parties or for new money mortgage purposes and so has limited application. Below is a link to a sample real property appraisal:
http://jamesdoughertyappraisers.net/ListingAppraisalSample.PDF
When it comes down to it, appraisals are one qualified individual's opinion of a property's value, but an opinion nonetheless. Therefore, it is hard to determine an appraisal to be of "bad" quality. However, an appraisal can be determined to be inaccurate for a variety of reasons, for example not including all of the relevant property information into the appraisal. Appraisers are perceived as a necessary element to any real estate transaction. Their expertise is needed for both sides of the transaction (buyer and seller) as well as third parties involved (lenders, etc.). Unfortunately, with the information that can be obtained from the internet and new programs for property valuation being introduced, it is possible that the appraisal profession could begin to decline and eventually become obsolete. The appraisal profession was created to protect consumers, however with safe alternatives such as computerized valuation services coming out, the amount of jobs in the appraisal industry could be at risk. Lenders are also backing these computerized valuation services and trying to push appraisers out of the picture. Below is a link to a YouTube clip discussing the matter and endorsing a recently published book regarding this topic:
http://www.youtube.com/watch?v=lR0Z7brAnhI
It is estimated that the appraisal industry will grow at a rate of 7% until the year 2020, which is slower than the average rate for all occupations. Although these statistisc do forecast growth, it shows signs of decline in the industry. Real estate appraisers can expect more and more competition as the years go on, and increased risk as uncertainty mounts in the industry.
http://jamesdoughertyappraisers.net/ListingAppraisalSample.PDF
When it comes down to it, appraisals are one qualified individual's opinion of a property's value, but an opinion nonetheless. Therefore, it is hard to determine an appraisal to be of "bad" quality. However, an appraisal can be determined to be inaccurate for a variety of reasons, for example not including all of the relevant property information into the appraisal. Appraisers are perceived as a necessary element to any real estate transaction. Their expertise is needed for both sides of the transaction (buyer and seller) as well as third parties involved (lenders, etc.). Unfortunately, with the information that can be obtained from the internet and new programs for property valuation being introduced, it is possible that the appraisal profession could begin to decline and eventually become obsolete. The appraisal profession was created to protect consumers, however with safe alternatives such as computerized valuation services coming out, the amount of jobs in the appraisal industry could be at risk. Lenders are also backing these computerized valuation services and trying to push appraisers out of the picture. Below is a link to a YouTube clip discussing the matter and endorsing a recently published book regarding this topic:
http://www.youtube.com/watch?v=lR0Z7brAnhI
It is estimated that the appraisal industry will grow at a rate of 7% until the year 2020, which is slower than the average rate for all occupations. Although these statistisc do forecast growth, it shows signs of decline in the industry. Real estate appraisers can expect more and more competition as the years go on, and increased risk as uncertainty mounts in the industry.
Overview of a Real Estate Appraiser
The Appraisal Foundation is nonprofit educational organization formed by the appraisal profession in 1987. Part of the AF's structure includes the Appraisal Qualification's Board (AQB), which establishes minimum education and experience guidelines that states must use in issuing appraisal licenses. There are four categories of appraisers that distinguish between residential and nonresidential assignments and the complexity of the transactions. The following categories are listed according to their requirements, from least to most strict: Trainee Appraiser, Licensed Real Property Appraiser, Certified Residential Appraiser, and Certified General Appraiser. The requirements for becoming one of the aforementioned appraisers range from 75 hours of classroom instruction with no experience or written exam, to 300 hours of classroom instruction with 3,000 hours of appraisal experience and a written examination. Below is a video that details some of the daily activites and responsiblites of an appraiser:
http://www.youtube.com/watch?v=XGrWJTlGbZc
In summary, the daily job of a real estate appraiser is to assign a value to specific properties using their qualified opinion, on a particular day, based on the information and evidence they have available.
It is obvious that demand for real estate appraisers fluctuates directly with increases and decreases in the real estate market. Therefore, renewed real estate activity will spur demand for appraisal services. At this moment in time, the future looks bright for appraisers, and more are needed. After significant declines resulting from the subprime mortgage crisis and poor economic conditions, the real estate appraisal industry is beginning its recovery. The following link further details these statistics:
http://www.ibisworld.com/industry/default.aspx?indid=1359
Real estate appraisers are paid either by the buyer or seller of a property. They are not definitively paid by one or the other, as who pays for the appraisal can be negotiated in the sales contract. The amount the appraiser is paid is determined by the specifics of the property being appraised, for example if it's a commercial or residential property. Some national appraisal firms include Integra and Cushman-Wakefield; regional firms include Metro-West Appraisal Company, LLC and Texas Company Appraisal; and local firms include Brewster Appraisal Firm and Breedlove Appraisal Services.
http://www.youtube.com/watch?v=XGrWJTlGbZc
In summary, the daily job of a real estate appraiser is to assign a value to specific properties using their qualified opinion, on a particular day, based on the information and evidence they have available.
It is obvious that demand for real estate appraisers fluctuates directly with increases and decreases in the real estate market. Therefore, renewed real estate activity will spur demand for appraisal services. At this moment in time, the future looks bright for appraisers, and more are needed. After significant declines resulting from the subprime mortgage crisis and poor economic conditions, the real estate appraisal industry is beginning its recovery. The following link further details these statistics:
http://www.ibisworld.com/industry/default.aspx?indid=1359
Real estate appraisers are paid either by the buyer or seller of a property. They are not definitively paid by one or the other, as who pays for the appraisal can be negotiated in the sales contract. The amount the appraiser is paid is determined by the specifics of the property being appraised, for example if it's a commercial or residential property. Some national appraisal firms include Integra and Cushman-Wakefield; regional firms include Metro-West Appraisal Company, LLC and Texas Company Appraisal; and local firms include Brewster Appraisal Firm and Breedlove Appraisal Services.
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