Bsad 295: real estate finance midterm exam
b) Bid-Rent Curve: The bid-rent curve is an economic concept which states that different users will be willing to pay more money for property located closest to the most desirable land uses such as downtown areas or other amenities like beaches. As one moves away from these centers, they become generally cheaper due to diminishing demand as distance increases. This curve helps to describe how buyers “bid” on properties with higher or lower rent depending on where it is located relative to certain desired characteristics.
c) Fee Simple: A fee simple estate refers to an unrestricted form of absolute ownership of real estate which gives the holder the right to use the land and dispose its title how they please through sale or transfer until death according rights pass heirs should case arise . The most common type estate found modern times typically enjoys highest level protection government full control over any changes made property addition , excluded sale mortgaged debts ( though bank take lien security )
d) Location Quotient: The location quotient (LQ), also referred to as localized concentration ratio, is a statistical measure used by economists and geographers that compares an area’s industry composition against either a national average, state average, region average or metropolitan area average employment distribution in order compare regions determine differences similarities . LQ calculated dividing proportion particular economic activity specific locality nation – wide figure example say Raleigh Durham showing 10 % construction industry workforce mean across US 8 % then LQ 1 25 / 0 08 = 1 56 indicating 56 % greater concentration building trades within Raleigh Durham compared rest country
e) USPAP Appraisal Process :The Uniform Standards Professional Appraisal Practice process consists six steps including Identification Assignment Clarification Scope Analysis Report Presentation Step One requires defining purpose assignment assembling background data relevant subject followed Steps Two Three establishing parameters analysis employed approximating value expected fulfill specified purposes Four well known appraisal approaches Comparatives Cost Income Sales proceeds comparison method used determine value final result assessment step Five gathers data credible supports conclusions reached preceding stages connecting dots putting appraisal report together Lastly sixth stage Reports delivery presentation involves distributing document addressees disseminating education pertinent parties about process main issues factors influencing results.