Real Estate Finance

Financing real estate is unique compared to financing other assets. The main difference between real estate credit ande other loans is the concept of collateral. A mortgage is a pledge of property to secure a debt. If a borrower defaults on their mortgage, the lender has the right to tak legal action to sell the property to recover the funds.

The real estate market is at an interesting place right now. Housing prices are low and mortgage rates are extremely low. One real estate expert advises anyone who can to buy a second home. "I would first go out and buy a beachfront property," she said. "Go out and buy a second home. It's the last piece of the real estate market that has yet to hit bottom.

http://www.cnbc.com/id/49971041

This next article is very interesting because it compares different real estate markets across the US. It shows you what $2.9 million will buy you in Ballard, California, in Golden, Colorado, and in Chicago, Illinois. While each property is very nice, you get much more for your dollar in Colorado. The price per square foot from lowest to highest was in Colorado, then Chicago, and last was California.

http://www.nytimes.com/2012/12/13/greathomesanddestinations/real-estate-for-2-9-million.html?_r=0&adxnnl=1&pagewanted=2&adxnnlx=1355339905-el+rnThzzo3Y+9EE951ugw

Overview of a real estate appraisal

A real estate appraisal is an opinion of value. This value depends on the anticipated utility and cash flows into the future of the property, and thus is time sensitive. There are economic, political, and environmental forces that are constantly changing and therefore affecting the real value of all property.

There are different approaches to appraising property and in practice, appraisers use all of the approaches and weigh them appropriately. One of the major tools appraisers use is comparing recent sales in the market. Unfortunately, there are always lulls in the marketplace that make using this tool difficult sometimes. Nowadays, many local listings are listed significantly less than the amount they sell for. This situation can result in a low appraisal value for any property compared to these properties.

http://www.sfgate.com/realestate/article/Accurate-appraisal-can-be-a-challenge-4062386.php

Overview of a real estate appraiser

A real estate appraiser is an expert who estimates a property's value. To become a real estate appraiser in Texas, one must become certified through the Texas Appraiser Licensing and Certification Board (TALCB). The person must complete two 75-hour programs and have a couple of months of real world experience to become certified. Once a state-licensed appraiser, you will be hired to assess the value of residential homes, commercial buildings, and other property once placed on the real estate market. There is a formal process of collecting data, analyzing the data, and presenting the value of the property.

Appraisers are paid by the job. They work for and find their own clients and aren't typically working through an employer. The median income for a home appraiser is $65,000-80,000 per year. How much the appraiser charges for a property appraisal depends on many things. These include the size of the property, the real estate market it is in, or the time of the year. These variables can greatly differ appraiser's incomes depending on what kind of properties they appraise, from residential homes to apartment complexes to ranch land.
http://www.ehow.com/about_5078927_average-salary-home-appraiser.html

One technique appraisers use to value property is to look at how much similar properties sold for recently. However, currently the real estate market is dragging and in many neighborhoods the only recent sales are foreclosures. In this article, one woman in California was selling her townhome and the appraisal value came in too low, in her opinion. This was because the only sales near her were for foreclosures which greatly undervalue the property. In a national survey this year, 1 out of 3 realtors said that contracts for home sales were renegotiated, delayed, or cancelled due to the appraisal value coming in below the originally agreed upon price.
http://www.bendbulletin.com/article/20121125/NEWS0107/211250308/