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Unformatted text preview: m) 1-15 1. IMPORTANCE OF REAL ESTATE FINANCE CHAPTER 1: IMPORTANCE OF REAL ESTATE FINANCE PREVIEW
Real estate finance is the allocation of funds in large quantities to borrowers who wish to acquire or develop real property. Financing is the process by which money is borrowed and allocated in a specific real estate project, such as obtaining a purchase money loan, or refinancing to obtain more favorable terms, or taking equity out of a property for other uses. A study of real estate finance must look at money from several points of view – the role of money in the economy, the sources of money for loans, the position of real estate principals and agents in competing for available money, and the processes of negotiating and setting up those loans. Finance is of paramount importance to the real estate industry, for without the availability of money to reach effective levels of real estate sales and development, significant real estate activity ceases. Since both land and construction are expensive, substantial sums of money are required for financing. These sums may be committed for a long period of time to permit a gradual repayment of principal borrowed. The money borrowed is secured primarily by the real property being financed. Dynasty School (www.dynastySchool.com) 1-1 REAL ESTATE FINANCE HISTORY OF FINANCING
LAND – THE UNDERLYING BASIS OF WEALTH
Real estate in the form of land and improvements comprises a substantial amount of the total net worth of the United States. In addition, the real estate industry is a major employer, providing billions of dollars in income for millions of American workers and investors. When mortgage funds are scarce, real estate activity and employment decline, and a general hardship is felt throughout the economy. FINANCING PRIOR TO THE 1930S
Sophisticated methods have developed for translating land's value into market transactions. But until well into this century, financing was not highly developed or systematized. FINANCING SINCE THE 1930S
The Great Depression promoted monumental changes in financ...
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This note was uploaded on 12/30/2010 for the course SOC 101 taught by Professor Zhung during the Spring '10 term at Punjab Engineering College.
- Spring '10