RECREview

A real estate practitioner who is duly registered and licensed natural person who, for a fee compensation or other valuable consideration, offers or renders professional advice and judgment on: (i) The acquisition, enhancement, preservation, utilization or disposition of lands or improvements thereon; and (ii) The conception, planning, management and development of real estate projects.

The taking of public property for public use with fair compensation to the owner. An exercise of the Right of Eminent Domain.

Refers to the land and all those items which are attached to the land. It is the physical, tangible entity which can be seen and touched, together with all the addition on, above or below the ground.

It is one way of how an agency relationship is created. It means that if the principal makes third persons to believe that someone is his agent and that third party deals with the agent, then the principal cannot deny the agency relationship even though it did not exist in fact.

A group of investors who have combined their financial resources with the expertise of a real estate professionals for the common purpose of acquiring, developing, managing, operating or marketing real estate.

Community Environment and Natural Resources Officer of the DENR

An agreement whereby the seller promises to sell a thing in consideration of the buyer’s compliance to the terms and conditions of the contract and that only after the buyer’s compliance. Will the seller be obligated to transfers or convey the ownership of the thing subject of the contract.

Environmental Management Plan is a section of the EIS that details the prevention, mitigation, contingency and monitoring measures to enhance positive impacts and minimize negative impact of a proposed project or undertaking.

A statement or declaration reduced in writing sworn to or affirmed before some officer who has authority to administer an oath or affirmation.

Usually refer to real estate properties that were previously mortgaged to the bank, by which because the owner failed to pay the

The right of the property owner to use, control or occupy the air space over his property, subject to the requirements of air navigation and government regulation.

The act or process by which a person procures property.

It is the reservation or automatic conveyance of real property to the State upon the owner’s death due to the absence of Will heirs or other legal claimants, to the title, or when the owner fails to pay the real estate taxes.

A mutual effort by a property owner and lender to avoid foreclosure or bankruptcy following a default; generally involves substantial reduction in the debt service burden during an economic depression.

The breaking of a Law, or failure to perform a duty or obligation specified in a contract or agreement, or revelation of secret, either by omission or commission.

Individuals actively engaged in real estate transactions. Primary market participants are those who invest in real property or who use real estate, e.g., buyers, sellers, owners,lenders, tenants. Secondary market participants include those who advise or assist primary participants, e.g., advisors, brokers, consultants, underwriters, appraisers.

Land that has not been improved with buildings. Such lands is often left by a developer in a subdivision for recreational use and enjoyment by all the property owners.

The rights of ownership whereby the owner has the right to enjoy, dispose, and exclude others and to recover.

The transferring of property to another; the transfer of property and possession of lands, or other things, from one person to another.

The periodic payment specified in a loan contract that covers the repayment needed to amortize the outstanding debt.

An analysis of the potential uses of a parcel of land and a determination of the highest and best use of parcel; a complete inventory of the parcels in a given community or other area classified by type of use, plus ( in some cases ) an analysis of the special patterns of use revealed by this inventory.

A situation in which the rate paid on a mortgage is greater than the rate generated by an investment on an unlevered basis.

An analysis of the availability and desire for a specific type of property.

Means “ Let the buyer beware “ ( The buyer duty-bound to examine the property, he is purchasing and he assumes conditions which are readily ascertainable on the face of the title ).

Similar or like property types or neighborhood in which inhabitants have similar, cultural, social and economic backgrounds.

A rise in value or price due to such factors as inflation or market conditions.

The liquidation of a financial obligation on installment basis. ( A periodic payment which includes interest and principal necessary to liquidate a financial obligation ).

A procedure where by property pledged as security for a debt is sold to pay the debt in the event of default payments or terms. It is a process instituted by a mortgagee by which the mortgaged property was sold at public auction to satisfy the principal obligation which the debtor failed to fulfill.

The transfer of property or rights and obligations over it in favor of another. (The one who assigns or transfer a property is called ASSIGNOR while those to whom property is assigned are called ASSIGNS or ASSIGNEES).

The ratio of the total employment to basic employment in an economic area; used to protect increases in total employment when basic employment is expected to.

A mortgage that has two or more properties pledged as security for a debt.

Where the final installment payment on a note is greater than the preceding installment payments and the payer pays the note in full ( Payment in lump sum although not yet due).

The right, advantage or privilege which an individual has in land of another, such as right of way.

A mortgage which can be paid off on its maturity.

The income received from rented units in a property divided by the income that could be received if all the units were occupied.

One qualified to render expert testimony.

A written instrument which, when properly executed and delivered, conveys title.

Any conditions revealed by a title search which affect the title to property; usually relatively unimportant items but which cannot be removed without a quit claim deed or court action.

Largest estate of ownership in real property in which the owner holds all rights not reserved by society.

A building, part of building, or obstruction which intrudes upon or invades a highway or sidewalk or trespasses upon property of another.

Environmental impact statement refers to the documents or studies on the environmental impacts of a project including the discussions on direct and indirect consequences upon human welfare and ecological and environmental integrity.

Property owned in common by the husband and wife.

It is the document issued by the DENR Secretary or the Regional Executive Director certifying that based on the representation of the proponent and the preparers, as reviewed and validate by the EIARC, the proposed project or undertaking will not cause a significant negative environmental impact; that the proponent has complied with all the requirements of the EIS System, and that the proponent is committed to implement its approved EMP in the EIS or mitigation measures in IEE.

A person appointed by the probate court to administer the estate of a deceased person.

It is a judgment for the mortgagor to pay the balance of the obligation if the proceeds of the foreclosure sale are not sufficient to cover the principal obligation.

A provision in a contract providing for periodic proportional upward or downward adjustment of price or consideration.

An agreement between a buyer and a seller whereby there is transmission of ownership on the object of the contract.

Property sales that was made with the primary intentions of selling in a short amount of time.

A general term used to describe financing techniques a typical of the majority of transactions. Financing may differ by amount of principal, interest rate, or payment terms.

A loan in which payments start low and increase over the term of the loan. The graduated payment mortgage is designed to help borrowers match payments with projected increases in income.

The addition of improvements to land ( utilities, roads, grading and services ) that makes the land suitable for resale as developable sites for housing or other purposes.

Environmentally critical project is a project that has a high potential for significant negative environmental impact.

A stipulation in a mortgage of several properties providing that when a buyer of one or more lots pays in full the purchase price, a portion of the payments shall be applied to the mortgage obligation and the mortgagee shall correspondingly release said lot or lots from the mortgage.

The right of the government to acquire property for necessary public or quasi-public use.

An agreement entrusted to a third person to be held by him until the performance or fulfillment of some act or conditions ETHICS – That branch of moral science, idealism, justness, and fairness, which treats of the duties that a member of a profession or craft owes to the public, to his clients or patron, and to his professional brethren or members.

The loss of money or anything of value, due to failure to perform, such as under an agreement to purchase.

Payment in kind. Payment of the debt or obligation with a property.

Right of the original owner to reclaim property sold through judicial foreclosure proceedings by payment of debt, interests, and cost.

A claim of a person on property owned by another.

A hold or claim which one person has upon a property of another as security for a debt or charges, judgments, mortgages.

The interest or value which an owner has in real estate over and above the mortgage against it.

The price which is willing seller will sell and a willing buyer will buy, neither being under abnormal pressure.

The periodic addition to equity caused by the gradual reduction in the mortgage balances as a result of periodic principal repayment provided for in a loan repayment contract.

A document executed by a property owner which creates or converts his property into a condominium pursuant to Rep.Act.4726.

An annotation in the Title which serves as notice that the property is subject to a pending litigation.

A contract of sale with the stipulation that the vendor shall have the right to buy back the property within the agreed period.

Means the development of land for residential, commercial, industrial, agricultural, institutional and recreational purposes, or any combination of such including, but not limited to, tourist, resorts, reclamation projects, building or housing projects, whether for individual or condominium ownership, memorial parks and others of similar nature.

A person in a position of trust and confidence, as between a principal and a broker; the broker as fiduciary owes certain loyalty which cannot be breached under rules of agency.

Measurement and boundaries. A term used in describing the boundary lines of land, setting forth all the boundary lines, together with their terminal points and angles.

The improvement which does not produce an adequate return for the amount invested on a building or property. An improvement which is not suitable to the site on which it is placed due to excessive size or cost.

A lien created by law which exists in favor of persons who have performed or furnished materials in the erection or repair of a building.

Provincial Environment and Natural Resources Officer of the DENR.

The right of the state to enact laws and enforce them for the order, safety, health, morals and general welfare of the public.

A deed of release or renunciation of a legal right. A deed to relinquish any interest in property which the grantor may have had a protest or adverse claim.

A deed used to convey real property which contains warranties of the tilte and quiet possessions. In a warranty deed, the grantor is to defend the premises against the lawful claims of the third person.

A lease of a property in which the rental is based upon the volume of sales made upon the leased property.

Real Estate Service Act of the Philippines ( R.A. No. 9646 )

Subjective Value. The property’s value to its occupants or users.

A principal is commonly known as the person who engages the agent for representation.

The proof or act of proving at a court that a last will and testament is actually that of the deceased person.

Shall refer to and shall consist of Real Estate Salesperson, Real Estate Broker, Real Estate Appraiser, and Real Estate Consultant.

All or part of a standard rule of USPRCP from which departures is not permitted.

Considered judgment arrived at after careful investigation and analysis, discussion and deliberation with the client in a consulting engagement.

The exercise of police power by the municipality or city and regulating and controlling the character and use of property.

Includes all the rights and benefits related to the ownership of real estate.

A writ authorizes and direct the proper officer of the court, usually the sheriff to carry into effect a judgment or decree of the court.

A study of the anticipated movement of cash into or out of an investment.

The provision of competent, disinterested an unbiased advice, professional guidance, and sound judgment on diversified problems in the broad field of real estate, on a fee basis, by qualified professionals who subscribe to a suitable standards of practice and code of professional ethics.

Regional Executive Director of DENR

Objective Value. Property’s value to an impartial buyer who represent the market.

A mortgage containing a clause which permits the mortgagor to borrow additional money after the loan has been reduced, without re-writing the mortgage.

Environmentally critical Area is an area that is environmentally sensitive.

The estate benefits drives from the servient estate in an easement.

It means that if at the end of the period of lease, the lessee continues to enjoy the thing leased with the acquiescence of the lessor, it is understood that there is an implied new lease.

A mortgage which can be paid off at any time even before its maturity.

A stipulation which prohibits the mortgagor from alienating the property within the period of the mortgage.

It is one way of how an agency relationship is created. It means that if a person having no authority whatsoever purports to act as an agent and the purported principal later adopts the acts of that agent, an agency relationship has retroactively been created.

Any question or doubt arising from historical or prospective realty investment desire dealing with difficult decision on available alternative courses of action, project, or situation. This calls for the Consultan’t decision-making service.

As defined under RESA “ a natural or juridical person who, for in expectation of a fee, compensation or other valuable consideration offers or render professional advice and judgment or: ( 1 ) The acquisition, preservation, utilization, or disposition of land or improvements thereon, or valuable rights existing or to be created thereon. ( 2 ) The conception, planning and development of realty projects, which may or otherwise encumber units like subdivision lots, condominium units, market stalls, memorial parks, and like “

The information pertinent to a specific assignment. Such data may be divided into four different classes: General ( relating to the economic and demographic background, the region, the city and the neighborhood ), Specific ( relating to the subject property and comparable properties in the market ), Primary ( information gathered by the Consultant that is not available in a published source, such as property dimensions and characteristics ), and Secondary ( published information such as census data ).

An analysis of the amount of space ( usually expressed in square meter ) or the number of units ( absorption rate ) that can be sold, leased, put into use of traded on the market during a predetermined or estimated period of time ( absorption period ), and at prevailing prices or rentals.

The date of the transmittal letter of a written report or the date a written report lacking a transmittal letter is prepared by the Consultant. The date of an oral report is the date it is communicated to or for the client. The date of the report may or may not be the same as the effective date at which the anlyses, opinion, and advice in a consulting service apply.

Refers to a real estate project that is able to meet defined financial investment objectives, the ability of a project to produce sufficient cash flows to repay all the expenses involved in creating and marketing the project plus provide a competitive return to the owner/developer. A criterion of highest and the best use analysis.

Any question, doubt, uncertainty, or difficulty arising from a historical realty situation in which something has gone wrong from a normal situation without yet available explanation. This calls from the Consultans.

The reasonable and probable use that result in the highest present value of the land after considering all legally permissible, physically possible and economically feasible uses. Capitalization rates or discounts rates for each feasible use should reflect typical returns expected in the market. Highest and the best use is usually determined under two diffirent premises; as if the site was vacant and could be improved in the optimal manner or as the site is currently improved.

A letter accompanying a consulting report that formally presents the report to the person who requested it and may include information such as; address and description of the property problem, or property interest subject of consulting engagement, statement that property inspection and all necessary analyses were completed by the Consultant, date of consulting report, summary conclusion and recommendations any extraordinary assumptions or limiting conditions, consultants signature and reference to accompanying consulting report.

Right of an occupant of land to acquire Title against the real estate owner, where possession has been actual, continuous, hostile, visible, and distinct and in the concept of owner for the statutory period.

A shortened consulting report that states the conclusions and recommendations of the Consultants study and analysis. This report typically contains a statement of the problem or issues of the subject of consulting engagement, purpose of the consulting engagement, a description Letter report

Specifications in a consulting report that restricts the assumptions in the report to certain situations, for example, date and use of the consulting service, definition of value, identification of real estate and property rights being valued, definition of surveys used or not used.

A study of a proposed economic activities capability of being accomplished under certain conditions and assumptions of marketing, technical, or financial aspects. Also, a study of the cost-benefit relationship of an economic activity.

The identification and analysis of submarkets within a larger market, resulting in the classification of consumers or buyers into relatively homogeneous groups based on their economic, demographic and/or psychographic characteristics ( such as attitudes, habits, and lifestyle ). This processes the potential users of the subject property from the general population, according to defined consumer characteristics.

A technique used to determine just compensation for land that has been partially taken through condemnation. In this method, the value of the property before condemnation and after condemnation is determined. The value of the remaining property not taken through the condemnation is the difference between the value before and after condemnation.

A series of cash flows in which payments occur at regular intervals. The payments could be equal or could represent mathematically related or non-mathematically related patterns.

The act or process of providing information, analysis of real estate data, and recommendations of conclusions on diversified problems in real estate, other than estimating value in a disinterested manner.

The desire to buy to satisfy need coupled with the ability to pay. When the word demand is used in economic writings, this demand is usually assumed.

Information that is not specific to a certain property, e.g., interest rates, employment rates and census information.

The process of forecasting future trends based on current and past data patterns and relationships. Extrapolation assumes that the same economic factors that affected past trends are likely to continue over the forecasting period.

The date at which the analyses, opinions, and advice in an appraisal, review or consulting service apply.

The use for a property which will bring the optimum or highest returns or advantage as of a certain time.

A stipulation which authorizes the mortgagee to appropriate the property as his own upon failure of the debtor to fulfill the principal obligation.

Delay or negligence in asserting one’s legal right.

Anything which affects or limits the fee simple title to property, such as mortgages, easements, or restrictions of any kind. Liens are money encumbrances which make the property security for the payment of a debt or obligations, such as mortgages and taxes.

The clause in a mortgage that gives the mortgagor the right to redeem his property upon the payments of his obligations to the mortgagee.

Property exclusively owned by the wife.

Real Estate Investment Trust.

The use or uses of a consultants reported consulting engagement, opinions and conclusions, as identified by the consultant based on communication with the client at the time of the engagement.

Information gathered by the Consultant that is not available in a published source.

A real estate analysis of a specific property that addresses the ability of the property to be absorbed, sold or leased under current and anticipated market conditions.

The time period during which an income property is expected to this lease up to a level stabilized occupancy. Stabilized occupancy assumes rental achievement at market levels as well as physical occupancy at stabilized levels.

Any written communication of a consulting service that is transmittal to the client upon completion of an engagement.

A method of estimating property value by discounting on expected future cash flows to a present value by a rate typical for investors in the marketplace for the interest being valued. The approach may or may not explicitly include financing.

The authoritative rule which serves as guide to achieve competent and ethical practice in developing and reporting the consulting service.

Personalized evidence indicating authentication of the work performed by the consultant and the acceptance of the responsibility for content, analyses, and the conclusion in the report.

The client and any other party as identified, by name or type, as users of the consulting report, by the consultant based on communication with the client at the time of the engagement.

Refers to both real estate and real property. ( In some jurisdiction or usage, the terms real estate and real property may have the same meaning. The separate definition recognizes the tradition as two concepts in appraisal and consulting theory ).

Data obtained from published sources that have been collected by the consultant, e.g., census information, demographic information and published interest rates. See also data, primary data.

The relative ease with which a person can enter or exit a site or building. Accessibility is important when determining the suitability of a site or a building for a particular use.

All or part of a standard rule of USPRCP from which departure is permitted under certain conditions.

An appraisal or consulting that estimates the market value of a property to be acquired for a public use by a government so that just compensation can be offered to the property owner.

Income that remains from net operating income ( NOI ) after debt service is paid but before ordinary income tax on operations is deducted. Also called equity dividend or per tax cash flow.

The risk associated with the uncertainty of future income flows caused by the nature of a business. In real estate, business risk includes future variability in rents, vacancies, and operating expenses.

The process of converting future income top a present value by mathematically reducing future cash flow by the implied interest that would have been earned assuming an initial investment, an interest rate and a specified period (possibly divided into shorter equal periodic increments ).

The main tenant in a shopping center that attracts shoppers or traffic. Anchors are strategically placed to maximize sales for all tenants. The type of anchor depends on the type of shopping center e.g.,supermarket is a typical anchor for a neighborhood shopping center, whereas a major chain or department store is a typical anchor for a regional shopping mall.

The ratio of the total amount of the loan divided by the invested capital ( equity ) of the owner(s).

A ratio that represents the relationship between a particular year’s cash flow and the present value or the interest applicable to the cash flow.

The act of combining two or more parcels of land into 1 large tract; usually done to allow the construction of a larger building in the hope that it will produce more income than several smaller buildings. An additional value ( plottage value ) may be created above and beyond the sum of values of the separate parcels when the land is joined together.

An ownership concept that describes real property by the legal rights associated with owning the property. It specifies rights such as the rights to sell, lease, use, occupy, mortgage, and trade the property, among others. These rights are typically purchased by the buyer in a sales transaction unless specifically noted or limited in the site.

The process of valuing the property for tax purpose. The assessed value may or may not equal the market value.

In condominium developments, the percentage of ownership held by one owner as compared to the whole property; may be measured on a square meter or price basis, e.g., the ratio of the square meter of one condominium as compared to the total square meter of all condominiums.

150. An analysis of the impact of proposed land use on its environment. Including the direct and indirect effects of the project during all phases of use.

The price or outlay of funds required to obtain rights in a property. Its cost includes expenses such as closing costs, mortgage loan origination fees, legal and consulting fees.

A loan that is secured by more than one property or lot. It is commonly used in construction financing for subdivision or condominium development.

A selection of a city in which a majority of the structures are dilapidated.

In surveying, a horizontal angle from 0 to 90 that specify the direction of a course or angle in relation to true north or south.

A public record of the assessed value of property in a taxing jurisdiction.

In an eminent domain proceeding, benefits are the betterment gained from a public improvement for which private property was taken in the condemnation.

An estimate of the total time period over which a property can be successfully sold, leased, put into

The party who engages a consultant by contract in a specific engagement.

The product of disaggregation, defines a relatively homogenous supply of housing units that tend to be occupied by a relatively homogenous group of households. For example, the sub-market of 2bedroom one-level houses selling for P180,000 to P200,000 tends to be occupied by households with similar economic, social and demographic characteristics.

The act or process of evaluating ad giving advice on a property or a development projects for its viability in terms of ROI, pertains to consulting and related functions, e.g., HABU analysis, location/site analyisi, market study services.

Reversion of property to the state owing to lack of any heirs capable of inheriting; or due to other causes provided by law.

The work or service performed by real estate consultants, as defined by USPRCP terms in these standards; evaluation, review, and consulting.

An addition to land from natural causes as, for example, from gradual action of the ocean or the river waters.

A study that reflects the relationship between acquisition price and anticipated stream of future benefits of a real estate investment.

The sudden removal of land from one parcel to another, when a body of water, such as a river, abruptly changes its channel.

An identified parcel or tract of land including improvements, if any.

The interest, benefits, and rights inherent in the ownership of real estate.

An estimate of the number of units or square meter per time period of a particular property type that can be successfully sold, leased, put into use or traded in its market area at prevailing price or rentals.

The value resulting from business organization including such things as management skills, assembled work force, working capital, trade names, franchises, patents, trademarks, contracts, leases, and operating agreements.

Any process of converting income into an estimate of value.

The use of borrowed funds to acquire a capital investment, as opposed to investing one’s own funds. In real estate, the property itself usually serves as the security for the debt.

The quantity of real property desired at a certain price at a specific time in a market area and/or market segment.

The market in which long-term or intermediate-term money instruments are traded by buyers

The surface space defined by two-dimensional boundaries of a building, lot, market, city or other such space, measured in square units. For example, a rectangular building that measures 30 meters has an area of 3,000 square meters.

Dispersion from a central point. (1) The movement of people, industry, and business from the city to the suburbs, rural urban fringe, and/or smaller cities (2) The breakdown of an existing business into smaller units or expansion through the establishment of separate units.

A price expressed in terms of cash as distinquished from a price that is expressed all or partly in terms of the face or nominal amount of notes or other debt securities that cannot be sold on the market at their face amount.

The exercise of the power of eminent domain by the government, i.e., the right of the government to take private property for public use.

The periodic income or loss arising from the operation and ultimate resale of an income producing property. The cash flow could further be classified as either before-tax or after-tax cash flow and could also reflect the impact of financing. See also before-tax cash flow ( BTF ), after-tax cah flow ( ACTF ).

Debt instruments that are issued using a pool of mortgages for collateral. The issuer retains the ownership of the mortgage pool and issues bonds as debts against the mortgage pool. However, all amortization and prepayments flow through to investors.

The total change in property value over a holding period.

A clause in the Deed of a property that limits its type of use or intensity of use; usually passes with the land regardless of the owner.

The nature in which a city grows outward from its point of origin ( siting factor ). City growth can be affected by availability of developable land, technology, transportation modes and the willingness and ability of the local government to provide needed services. For example, cities such as Manila and Makati, which have relatively scarce land, grow with an increasing density of land use.

The industry in a geographic area that provides employment opportunities and allows it to attract income from outside its boundaries.

In a condemnation proceeding, damages that are legally required to be paid to the owner or tenant of a property that is being wholly or partially condemned. Damages are usually limited to the loss of value in the property. Sentimental value, inconvenience, and loss of business not related to the real estate are not typically compensable. Physical invasion of the property by a condemning authority or the taking of some property right must usually occur before damages are considered compensable.

An annual financial report that shows income, expenses, and profits and is often used to evaluate the return on the investment in the property.

A study of the fundamental determinants of the demand and supply for all real estate in a local economy. Population, households, employment and income are the principal variables on the demand side of local economic analysis. Past trends and forecast of these basic demand determinants are made for a defined geographic area. Factors on the supply side of the local economy such as the amount of land available for specific land uses, construction costs, local infrastructure, etc. are also considered. Economic base analysis and input-output analysis are two techniques to describe the local economy.

A person who charges a fee for rendering consulting service involving real estate problem or issues.

The cost to build a structure including direct cost of labor and materials, contractor’s overhead and profit plus indirect cost such as taxes and construction loan interest. Distinguished from original cost, which is the cost to the present owner who may have paid more or less than the cost of construction.

A legal instrument, similar to a mortgage that conveys title to property to a third-party trustee and secures an obligation owned by the borrower to the lender.

Something of value offered as a guarantee or security for the fulfillment of a financial obligation.

Items that are in need of repair because upkeep and repairs have been delayed, the result of which is physical depreciation or loss in value of a building; a type of physical deterioration that is usually curable.

Identification of the properties in a market or trade area that have similar characteristics and attract the same potential buyers or space users.

Costs that are readily identified in the construction of real estate, such as labor, materials, and contractor’s overhead and profit.

A systematic analysis based on specific methodology that seeks to identify and measure any effect on economic activity or market indicators resulting from the location, introduction or change of a major land-used activity within the market area. Examples are proposed overhead high-voltage electric transmission line traversing the area or the sudden availability of unexpected information about a major employer or land user in the area.

The group of properties that are in the same classification and complete directly with the subject property in the immediate market area.

A structure designed for occupancy as living quarters by one or more households. A dwelling is usually equipped with cooking, bathing and heating facilities. It does not include atructures used on a transient basis, such as hotels or motels.

In economics, refers to the ability of a product to maintain a quantity level of supply or demand as the price of that product changes. It measured as the percent change in quantity supplied or demanded divided by the associated percent change in price.

In accounting, a method of recognizing and recording items of income and expense to the period in which each is earned or incurred, respectively, regardless of the date of actual payment or collection.

A financing technique in which the seller finances part of the purchase through a note secured by a junior mortgage or contract for deed.

One who transforms rawland to improved property by use of labor, materials, capitals and entrepreneur efforts in an attempt to put land to its most profitable use.

A study that analyze the economic activity of a community, used to predict population, income and other variables that affect real estate values or land utilization based on the relationship between basic and non- basic employment.

A peso figure that represents only real growth and does not include inflation.

The ability to formulate an opinion, estimate or conclusion about an issue or problem, given that data or evidence available.

The area a housing consumer occupies ( sleeping, eating, bathing, etc.). The term housing unit generally implies exclusive control by the occupant over the sleeping quarters but does not necessarily imply exclusive occupancy of kitchen, bathroom and living areas. Technically, the term dwelling unit refers to a housing unit that contains private kitchen and bathroom facilities, as well as private sleeping and living areas that are exclusively occupied by the household.

Peso projections that account for only real growth and not for inflation.

A multi-unit structures or property in which persons hold fee simple title to individual units and an individual interest in common areas.

The study of the characteristics of the population in an area, especially in reference to size, density, distribution, charactereistics and changes in those variables. Used particularly in the valuation of commercial properties.

A form of ownership in which each resident of a cooperative apartment building as purchased shares in a corporation that holds title to the building. The individual pays a proportionate share of operating expenses and debt service on the building owned by the corporation, based on the amount of stock held in the corporation. In return for stock in the corporation, the individual receives a lease granting occupancy of a specific unit in the building.

A decision-making process, often used in public finance, that forces the decision maker to compare all direct and indirect positive and negative effects of the proposed decision on an objective basis, usually in pesos. Benefits must exceed cost to justify his projection or adopt the policy.

The sum of money an entrepreneur expects to receive in addition to costs for the time and effort, coordination and risk bearing necessary to create project. The portion associated with creation of the real estate by a developer is referred to as developer’s profit. Properties that also include additional entrepreneurial profit that is reflected in the going-concern value of the property.

Any method whereby the analyst prepares a cash flow forecast ( including income from operations and resale), selects a discount rate that reflects the return expected for the interest and uses the rate to calculate the present value of each of the cash flows. The total present value of the cash becomes the value estimate for that interest. Sometimes the cash flow forecast is based on an assumed pattern of change, e.g., compound growth.

The sum of money a developer expects to receive in addition to costd for the time and effort, coordination and risk-bearing necessary to develop real estate.

An agreement by which a lender receives some share of the income and/ or cash flow of a property. The participation might be based on a percentage of the net operating income, cash flow from operations and/or the gain from sale of the property.

The value of a property which includes the value due to successful operating business enterprise which is expected to continue. Going-concern value results from the process of assembling the land, building, labor, equipment, and marketing operation and includes consideration of the efficiency of plant, the know-how of management, and the sufficient of capital.

Any of 3 different types of space in a house, characterized by the type of use for that area. For example, the private sleeping zone includes the bedrooms, bathrooms, and dressing rooms: the living social zone includes the living room, dining room, family or recreation room, den and any enclosed porches: the working service zone includes the kitchen, laundry, pantry and other work areas, Halls, stairways and entrances are considered circulation areas.

The use of borrowed funds in the purchase of an investment. If the addition of the mortgage increases the return to the equity ( equity dividend rate or equity yield rate ), the addition of the mortgage has resulted in positive leverage. If the addition of the mortgage decreases the return to the equity, the addition of the mortgage has resulted in negative leverage.

A charge levied against developers of new residential, industrial or commercial properties by a municipal government to help pay for the added costs of public services generated by the new constructions, for example, charges for hook-up costs for water and sewer lines, road improvements, and extra needs for school, fire and police service.

The estimate time period during which an improvement yields a return over the economic rent attribute to the land itself; the estimated time period over which an improved property has value in excess of its salvage value.

A map showing and identifying the location of land that has been subdivided into individual lots. Locations are identified by lots,blocks and sections. Also given may be details such as streets, public easements, monuments, floodplains and elevations. When subdividing land, the developer generally presents a preliminary plat to the appropriate officials for consideration, and then files a final plat after improvements are made and approved.

The process of calculating investment returns for multiple sets of assumptions in order to assess the impact that changing the inputs has on the measures of return.

All tangible fixed assets ( tools, tooling, conveyor and other personal property) other than real estate used in any way to facilitate any manufacturing, assembly or warehousing activity. Distinguished from fixed building equipment.

A rate of return that discounts all expected future cash flows to a present value that is equal to the original investment. An IRR can be calculated for any defined cash flows, for example, for the whole property or for just equity position. Also called yield rate.

Real estate that is under FORECLOSURE or impending foreclosure because of insufficient income production. Any property that fails to continuously generate enough income to support the funds to develop it.

Housing units that are actually under construction. The actual number of housing starts may differ from the number of building permits issued. The number of housing starts is often used as an economic measure.

Testimony of persons who are skilled in some art, science, profession, or business, that skill or knowledge is not common to others, and that has come to such experts by reason of special study and experience in such art, science, profession, or business.

A sale that occurs because the mortgagor is unable or unwilling to make payments on the loan

A type of zoning that excludes racial minorities and low-income people from an area. This zoning may be intentional or unintentional, e.g., specification of a minimum structure size.

An updating technique that used population and household size figures from the previous census, local area data on building permits, demolition, conversions and vacancies since the last census to estimate the current number of households.

Vacant sites or land improved with buildings devoted to or available for use for human habitation, e.g., single-family houses, rental apartments, residential condominium units, rooming houses. Hotel or Motels are not considered this kind of property.

Money or capital used to purchase an interest in a property, usually with the intention of receiving some sort of cash flow or profit from the property plus a recovery of the initial outlay of funds. Is usually considered a more long-term use, as distinguished from speculation.

Local zoning codes designed to regulate the density of development on land, including restrictions on the minimum and maximum of the floor area per land area, and living space and recreation space requirements. Important in the development of planned unit developments.

A land use that is incompatible or that interferes with the surrounding lands uses, for example, activities that produce excessive noise or pollution in a residential area, a junkyard in a residential or other highly visible area or activities that area or activities that are not socially acceptable.

(1) The ability and willingness to pay for an economic good. (2) The appropriate multiplication of an income level by the number of customers. If household are the consuming unit, then mean household income should be use in conjunction with number of households to form the purchasing power variable.

Total horizontal surface of a specific floor, or the total area of all floors in a multistory building, computed from the outside building dimension of each floor. Balcony and mezzanine areas are computed separately and added to the total floor area.

A comparison of demand and supply to determine the existence of present and future demand or excess supply in a market. Another way of expressing the same thing is through the use of phrase “unmet demand or supply shortages”.

The earth’s surface including the solid surface of the earth, water and anything attached to it; natural resources in their original site, e.g., mineral deposits, timber soil. In law, land is considered to be the solid surface of the earth and does not include water.

Property rights that might be purchased with real estate, land building and fixtures that are either tangible or intangible personal property such as furniture in a hotel or the franchise ( business) value of the hotel.

The number of years required for cumulative income from an investment to equal the amount initially invested. The payback period does not consider the time value of money and therefore, is not discounted cash flow analysis technique. See also discounted cash flow analysis ( DCF )

A method of valuing residential, industrial or recreational land to be used for subdivision development. The analysis is typically used in feasibility studies and when comparable sales are scarce.

A specific provision in a construction budget for unforeseeable elements of cost that may be encountered within a construction project. Contingencies are different from escalation costs which account for price-level changes overtime.

The total floor area of a building measured in square meter from the external walls, excluding unenclosed areas. Unlike gross living area measurements.

The process of investigating the subgroups of the population who express demand for real estate by analyzing their economic, demographic and psychographic characteristics ( such as attitudes, habits and lifestyles.).

The cost to create a project including direct costs of labor and materials, contractor’s overhead and profit plus indirect costs such as taxes and development loan interest.

A measurement of land that above the street line or other landmark such as a river or lake. A front meter measurement is typ[ically used for lots in urban areas of near-uniform depth.

The ratio of benefits generated by an improvement divided by the cost of that improvement. The ratio must exceed 1.00 for the improvement to be considered desirable. The alternative term, benefit-cost ratio, is actually more descriptive.

The ease with which building permits for a project may be obtained, as well as the proposed project’s ability to meet other regulatory requirements.

The climate, topography, natural barriers, transportation systems and other factors of location that affect the value of the property.

A misconception occurring when an analyst become overly optimistic about a project. Occurs when the analyst is swayed by the client’s enthusiasm for the product and begins to believe that the project is unjustified unique in character.

A mortgage that is not insured or guaranteed by a government agency but may be privately insured.

The number of people in a community who are gainfully employed.

In economics, the four factors of production are

The law of supply and demand is

253. Which of the following is NOT an agent of production?

Political forces affecting value may include

What are the 2 categories of tangible property?

Zoning is an exercise of the

Which of the following types of property is subject to ad valorem taxation?

A person owning less than the entire bundle of rights has

A metes and bounds description begins and ends with the

A ____identifies a property in such a way that it CANNOT be confused with any other property.

All of the following statements are true EXCEPT

All of the following will affect the market value of a property EXCEPT

263. Market value is ____the same as selling price.

264. Price is

265. Functional utility depends on

266. Value in use is

The value added to total property value by a particular component is an example of the principle of

The concept that the value of a particular component is measured by the amount that its absence would detract from the value of the whole is

The market loss caused by depreciation in an older structure may be offset by all the following EXCEPT ;

Studying appraisal helps a person

A dramatic change in short-term demand for real estate in the local market is likely to immediately precipitate

The area and community analysis section of an appraisal report

In analyzing the economic environment and market area, it is best to

Which of the following reports is usually NOT prepared by a real estate appraiser?

An appraisal of a specific-purpose property for insurance purposes would depend most heavily on;

The first step in the appraisal process is to

An appraisal is

The “as of ” date in an appraisal report is

Sales data descriptions of an appraisal report contain

All of the following are ways to delineate a neighborhood EXCEPT

All of the following are sources of comparable sales EXCEPT

Which of the following criteria most completely define “highest and best use”?

The 3 basic approaches used to estimate value are

Units of comparison are used in

Final value estimates should be rounded to reflect the

When reconciling the adjusted sales prices of comparables, the greatest emphasis should

Which of the following forms of appraisal reports is NOT recommended?

Which of the following approaches would probably be given the most weight in

The form in which a formal appraisal is presented is called

The form of an appraisal report

The effective age and the useful life of a building represent judgments made by the

The period over which existing improvements are expected to continue to contribute to

For the building, effective age is best defined as

The utility of real estate is its

In appraising a residence, adjustments are NOT made to the comparable property for;

When a site has improvements on it, the highest and best use

To be considered as a comparable, a property

The direct sales comparison approach is better than the income or cost approach Because;

The appraisal of an established 20-year-old motel on a road with numerous competitive motels would most likely be based on the;

In applying gross rent multiplier analysis to the subject property, the appraiser would use the;

In estimating the market value of a comparable sale, an appraiser must consider all of

The terms of financing, whether good or bad,

Adjustments for the property rights conveyed, financing, conditions of sale, date of sale, and location are often made to the ___of the comparable property.

Cumulative percentage adjustments may be used

The best unit of comparison for vacant land is;

You are asked to appraise a vacant building lot. The neighborhood is about 75% built

In appraising a residential property by the cost approach, the appraiser considers the;

In the cost approach___ is deducted after estimating the cost to reproduce an existing structure.

External or economic obsolescence can be caused by all of the following EXCEPT

Economic obsolescence in a residence does NOT result from

Reproduction or replacement cost includes all of the following EXCEPT

In analyzing obsolescence, the test of curability of a component in a building is whether the cost to cure is no greater than the;

Which of the following is NOT a type of depreciation?

Estimation of accrued depreciation and obsolescence does NOT involve

In appraisal, accrued depreciation is really an estimate of

The cost approach is NOT useful for

An appraisal of a freestanding store and the land it occupies is an unbiased estimate of the value of an interest in;

The term vertical interests does NOT refer to rights to

Inflation tends to increase the value of

With an amortized mortgage loan,

When each alternative use requires the same capital investment, the use that maximizes the investment’s ___on a long-term basis is the highest and best use.

Land purchased for P50,000 cash appreciates at the rate of 15% compounded annually. About how much is the land worth after 5 years? Disregard taxes,

A land speculator expects that a certain 100-acre tract can be sold to a subdivider 4 years from now for P10,000 per acre. If holding and selling costs are disregarded, what cash price today (rounded to the nearest P1,000)would allow the speculator to realize a 15% compounded annual rate of return on the entire tract?

Gross income multipliers are generally considered part of

Use of a gross rent multiplier is valid when the subject and comparable properties have similar.

Time-distance relationships between a site and all relevant origins and destinations are called;

The land on which a 10-year-old house is located is valued at P28,000, and the reproduction cost of the dwelling is P92,000.Straight-line depreciation is 2% per year, applied to the building only. If there is no other obsolescence, what is the indicated value of the property?

An allowance for vacancy and collection loss is estimated as a percentage of

Effective gross income is income after an allowance for

In discounted cash flow analysis, the reversion to be received at the end of the holding period is;

To earn 12% annual cash return on a cash investment, what should you pay for a property that earns P4,000 per month and has operating expenses of P1,250 per month?

In selecting an overall capitalization rate for an income-producing property, the appraiser will consider all of the following EXCEPT

To obtain the present value of a series of income, a(n)___rate is applied.

A fast food chain could buy the building and land necessary for a new outlet for P200,000. Instead, an investor bought the property for this amount and leased it For P2,000 per month over a 20-year term. Rent is payable at the end of each month. What yield to maturity is implied by the lease, assuming that, at the end of 20 yrs, the property is still worth about P200,000?

When market rent is less than contract rent, the difference is known as

If a particular buyer requires a recapture of the building portion of the purchase price in 25 Yrs., what is the indicated recapture rate for the building, assuming straight-line recapture?

In a high-rise,100-unit apartment building there is a basement laundry area that brings in P100 monthly from the concessionaire. The laundry income is ;