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