Welcome to Real Estate Decision Making REE 3043 Fall 2012 Dr. M. Schmidt

2 Outline  Welcome & Introductions  Syllabus Review  Class Overview  Chapter 1: Why Study Real Estate?  Chapter 2: Legal Descriptions

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4 Class Overview  Introduction (Ch 1) & Legal Descriptions (Ch 2)  Real Estate Market Dynamics and Urban & Regional Economics (Ch 14 & 15) Exam I  Property Financing (Ch 16)  Time Value of Money (Ch 17)  Mortgage Mechanics (Ch 18)  Analyzing Income-Producing Properties (Ch 19) Exam II  Residential & Commercial Land Uses (Ch 11 & 13)  Real Estate Brokerage (Ch 8)  Real Estate Appraisal (Ch 9) Exam III  Home Purchase Decisions Ch (12)  Student Presentations

5 Chapter 1: Why Study Real Estate  Definition of Real Estate & Special Characteristics of Real Estate  The Market for Real Estate Knowledge  Industry Trends and Statistics

6  Definition of Real Estate: Real Estate can be defined as:  Special Characteristics - fixed location - uniqueness - interdependence of land use - long life - long-term commitments - large transactions - long gestation period Chapter 1: Why Study Real Estate?

7 The Market for Real Estate Knowledge  What is real estate body of knowledge? - legal analysis concepts - real estate service industry concepts - market analysis concepts - financial and investment analysis concepts  What is a market?  Where does supply and demand come from?  How does supply and demand interact?  Principle of supply and demand can be applied to the market for real estate knowledge

8 Industry Trends and Statistics: The importance of Real Estate  Single largest component of wealth in US  Real Estate accounts for 5% of US GDP  Creates Jobs for over 9 million Americans  It is source of over 70% of local government revenues * as of 2002

9 Industry Trends and Statistics: Home Values source: Standardandpoors.com

Industry Trends and Statistics: Foreclosures Started By Loan Type (NSA)

Industry Trends and Statistics: 4th Quarter 2008 Foreclosures by State source: CNN.com, April 9, 2009:

Industry Trends and Statistics: US Home Ownership Rate 12

Industry Trends and Statistics: Housing Starts

14 Industry Trends and Statistics: The Cost of Borrowing 30 Year fixed mortgage rates ( )

15 Industry Trends and Statistics: Employment  Number of individuals employed in the real estate industry from 1972 though 2001 Source:

16 Industry Trends and Statistics: US Mean Annual Wages by Real Estate Occupation  Average Annual Wages for Real Estate Occupations ( All OccupationsN/A $32,990$34,020$35,560$36,210$37,440$37,870$39,190$40,690$42,270$43,460$44,410 Appraisers ( )$44,340$41,670$41,700$42,420$46,120$49,900$50,280$49,830$51,110$52,290$53,410$53,520$54,230 Property Managers ( )$35,960$40,940$43,130$44,080$46,390$47,550$50,350$50,570$52,290$53,530$56,250$58,660$62,400 Real Estate Brokers ( )$54,220$62,190$60,080$65,410$72,130$69,920$75,330$76,930$80,230$79,800$77,240$78,360$76,060 Real Estate Salespersons ( )$37,270$36,990$37,950$38,430$42,470$44,950$50,440$52,090$54,350$55,090$54,410$53,100$52,490

17 Chapter 2: Legal Descriptions  1. Metes and Bounds Method  2. Rectangular Survey System  3. References to Recorded Plats

18 1. Metes and Bounds Method Metes = Distance: measured in feet Bounds = Direction of boundary: measured in angles (degree, minutes, and seconds) The circle: 360 degrees 4 quadrants: NE, SE, SW, NW 1 quadrant = 90 degrees 1 degree = 60 minutes 1 minute = 60 seconds

19 Metes and Bounds Method Measuring the Direction:

20 Metes and Bounds Method Example: Beginning at an iron pin on the northern side of Cambero Street, 20 feet due east of the north- eastern corner of the intersection of Cambero and Travieso Street, as measured along the north side of Cambero Street, running thence to an iron pin, running thence due to an iron pin, running thence to an iron pin, running thence to the point of beginning. 300 feet 150 feet 30° 15’ 10” Travieso Street Cambero Street 20 feet N W S E

21 2. Rectangular Survey System

22 Rectangular Survey System  Land is divided into: (N-S) & (E-W)  Strips 6 miles wide to west and east of principal meridians are formed by range lines.  Strips 6 miles wide to north and south of base lines are formed by township lines.  Range and township lines form a township, 6 x 6 miles = 36 square miles  Each township is divided into 36 sections, 1 square mile = 640 acres. (Note: 1 mile = 5,280 feet)  Each section is divided into quarters, each quarter is subdivided into quarters.

23 Rectangular Survey System Each township has 36 sections

24 Rectangular Survey System Example: The parcel is in the southwest quarter of the southeast quarter of Section 14 in Township 43 South, Range 34 East of the Tallahassee Principal Meridian.

25 3. References to Recorded Plats Plats: Engineer drawing of parcels of real estate. They are recorded as part of public records. A parcel is referred to as a “lot” within a “block” of a subdivision, for example : “Lot 4 of Block G”.