Read the text and do the exercises after the text.

1. Real estate 2. realty 3. government regulation 4. police power 5. escheat 6. zoning 7. eminent domain 8. fair-market value 9. tax law lien 10. enforcement 11. unowned 12. easement 13. mortgage 14. title to the property 15. lease 16. hedge 17. real estate broker 18. wide market 19. entanglement 20. rental 21. collateral 22. large outlay 23. down payment 24. closing date 25. title insurance 26. encumbrance 27. apportionment

1. недвижимое имущество 2. недвижимость, недвижимое имущество, "реальное" имущество 3. правительственное регулирование, постановление правительства 4. охрана государственного правового порядка 5. выморочное имущество ( оставшееся без хозяина после смерти владельца, не имевшего наследников или преемников) 2) переход выморочного имущества в казну 6. районирование 7. суверенное право государства на принудительное отчуждение частной собственности 8. стоимость земельной или недвижимой собственности в текущих ценах 9. право наложения ареста на имущество должника; право удержания 10. принудительное применение ( права, закона ); правоприменение; принудительное проведение в жизнь; принуждение к выполнению требований 11. не имеющий владельца или хозяина 12. право прохода, проведения освещения и т. п. по чужой земле 13. заклад; ипотека; закладная 14. право собственности; право на имущество; основание права на имущество 15. аренда, сдача внаем; наем 16. страховка, гарантия 17. брокер по операциям с недвижимостью 18. широкий рынок (характеризуется значительным разрывом между ценами продавцов и покупателей ) 19. затруднительное положение 20. сумма арендной платы; рентный доход; сдача внаем; выдача напрокат 21. гарантия, поручительство ( финансовое ) 22. большие, значительные расходы/траты 23. плата в рассрочку 24. дата завершения сделки (напр., с недвижимостью) 25. страхование прав 26. затруднение, помеха, преграда, препятствие 27.пропорциональное распределение

The term “real estate”, as commonly used, has two meanings. First, it is a name given to the commodity “realty”, which includes land all human improvements that have been placed on the land. Second, it is the name given to the business engaged in by those persons who conduct commercial transactions in real estate.

Control and Ownership. Certain necessary government regulation covers the control and ownership of real estate. This includes: (1) police power of the government, (2) government power of eminent domain, (3) the right of taxation, and (4) escheat to the state.

In the Unite States, police power can be exercised directly by a state government or delegated by it to another legally constituted agency, such as a city, village, or country. Controls and regulations under the police power are exercised through regional or community planning, zoning, and building and construction codes.

The power of eminent domain permits the government physically to take over real estate where necessary to acquire property for public use, under due process of law. Compensation for private damages and losses are either agreed upon or fixed by court action in accordance with the prevailing fair-market value of the property.

Under the right of taxation, the state or government levies taxes for the maintenance of its varied activities. Land and other realty are convenient to tax and are usually the basis for local taxation. If such taxes are not paid, the property owners may lose their land as a result of tax law liens and their enforcement.

Where an owner of land dies leaving no heirs and no will for disposing of property, ownership of the realty reverts to the state under a procedure known as “escheat”. Although this seldom happens, for heirs generally can be found, the lawof escheat provides a logical solution to prevent land from becoming “unowned”.

Restrictions on Real Estate.Control and ownership of real estate are also affected by private or voluntary limitations on the use of a property, either perpetually or for as limited time. Easements– rights exercised over a property by persons other than the owner – might give others the privilege of removing topsoil, cutting timber, or mining subsurface minerals. Leases give tenants or lessees the right to use premises for certain periodic rental payments. Mortgages are legal obligations assumed for the purpose of buying a property through periodic payments. Title to the property remains with the lender (mortgagee) until the buyer (mortgagor) repays the debts.

Economic Importance. In the United States approximately two thirds of the total national wealth is represented by land, land resources, and real-estate improvements. The value of all real estate is estimated in excess of six times the worth of all mechanical and other equipment of factories and utility industries. It is continually bought, sold, improved, financed, leased, managed, and appraised, and is used by individuals, organizations and businesses.

The important economic activities in which real estate plays a vital part include: (1) investment and real estate financing, (2) business and professional services, (3) government ownership and control, and (4) home ownership.

The large investment necessary to purchase real estate would keep ownership out of reach for the average buyer were it not for credit and financial aid, offered by individuals, private organizations, institutional lenders, and public agencies. Because of its durability and fixity of location, real estate has proved an ideal medium for mortgage investment financing.

It is estimated that more that 90% of all real estate transactions involve some use of mortgage credit. Provisions for monthly reduction of the loan principal and mortgage insurance have increased the safety of mortgage lending. Those who purchase real estate as investment have found it, when wisely acquired, an excellent hedge against inflation.

Private and Government Real Estate Function.

Real-estate activities are perhaps best known through business and professional services offered those who wish to buy, sell, exchange, finance, lease, or invest in real estate. The better-known real estate business and professional services include: (1) brokerage – sales, leases and mortgages, (2) real-estate appraising and (3) real-estate consulting.

A real estate broker acts as an agent and represents his client in dealing with third parties. A broker can speed the sale or selection of a home by reaching a wide market through contacts with other brokers. The broker can save time and avoid legal entanglements for his client by attending to negotiations, contract preparations, and details concerning the closing of title and transfer of property rights. The broker is generally compensated upon completion of the transaction on a percentage (5% to 7%) of the selling price. Unless stipulated otherwise, the seller is obligated to pay the commission.

A branch of the real estate business steadily growing in importance is that of property appraising. More and more buyers and sellers seek independent and objective estimates of the value of given properties. Under provision of law, mortgage loans must be based on a percentage of the value of the property offered as collateral. Appraisers, to, are often called upon to establish valuation for inheritance or income tax purposes, for estimating damages where property is taken under law of eminent domain, for establishing fair rentals, or for tax assessment purposes.

Real estate consultants serve principally as advisers to investment clients for a fee. As a rule, recommendations are made as to when to buy, what to buy, where to buy, and how to buy. The real estate consultant performs as important a function as does the investment analysts or counselor in the securities market.

Public ownership, use, and control of real estate on all levels of government exert an important influence on private ownership of real estate everywhere. In the United States the national government is the single largest owner of real property, and thousands of employees are engaged to administer the vast holdings in national parks and federal buildings. Acquisition and disposition of all federally owned real estate, except that controlled by the armed services, is under the General Services Administration.

Home Ownership

Of great interest and concern to many people is the phase of real estate activity that facilitates home ownership. Generally the purchase of a home represents the largest single outlay made by a family during a life time. Despite the importance and size of the investment, the purchase of a home should not be guided by economic considerations alone. A home, though necessary as shelter, should be a place where family life can prosper.

Certain rules should be observed in order to assure financially sound home ownership. The price of the house should not exceed three times the family’s annual income. Total outlay for maintaining the home – including mortgage, real estate taxes, utilities, and home insurance – should not exceed 25% of take-home income. Accumulated family savings, at the time of the purchase of a home, should not be less than 20% of the purchase price. The down payment should be a minimum of 10%.

The most important factor to consider prior to the purchase of a home is its location. It is well to keep in mind that while land and improvements are stationary, the surrounding neighbourhood or the community in which the home is situated is in a constant state of flux and movement. Changes in the immediate environment have a significant effect upon property values.

The purchase of real estate should not be undertaken without competent professional aid. The value of property under consideration for purchase should be determined by a qualified appraiser. A contract to purchase (binder) must be in writing to be valid and should be checked by the buyer’s attorney before it is signed. The terms of the sale should specify the amount of the down payment and the existing mortgage debt, if it is to be assumed. Mortgage terms must state specifically the total amount of the mortgage the rate of interest, the schedule of payments, and the cash due on the closing date. Provision must be made for title insurance, or a lawyer’s guaranty, that the property conveyed is “free and clear” of all encumbrances except those specified in the contract. Date, time, and place of the title closing must be given. The type of deed must be specified.

At the time of closing, the property to be purchased must be in the same condition as on the date of contract – subject only to the ordinary use and wear during the interval. A listing of equipment and non-realty (personal) items included in the sale is also necessary. Apportionment of real estate and other taxes, rents (if the property is under lease), insurance payments, and sewer and water charges are agreed upon. The broker’s commission, an expense usually paid by the seller, is stipulated. Finally, the contract must be signed by the buyer and the seller, with their signatures witnessed and preferably notarized.

I. Questions to the text:

1. What does the term "real estate" mean?

2. What governmental regulations are necessary for the control and ownership of the real estate and how are they exercised?

3. What are the restrictions on real estate?

4. Why is real estate is so important for the development of the economy\/

5. What is the excellent hedge against the inflation?

II. Finish the following texts according to the text:

1. The term “real estate” has two meanings. First, it is …. Second, it is …

2. Real-estate activities are…

3. The better-known real estate business and professional services include…

4. As for real-estate broker, he …

5. The broker can …

6. The broker is generally compensated …

7. As for the real estate appraising, more and more buyers and

8. Appraisers, are often called…

9. As for real estate consultants they…

10.As a rule, recommendations are made…

11.Of great interest to many people is the phase of real estate activity that facilitates

home ownership, because …

12.It is clear that the most important factor to consider prior to the purchase of a home

…

13.Moreover, changes in the immediate environment …

14.Thus, the value of property to purchase should be determined …

Text 2.

UNDERSTANDING REAL ESTATE FINANCE – THE KEY TO YOUR SUCCESS

Read the text and answer the questions:

1. Where could you find money to finance investment property many years ago and are there any differences today?

2. What do banks and financial institution require before giving you a loan for your real estate investment business?

3. What is necessary to do for you to do to get a loan without difficulties?

4. What are you actions if the bank rejects your application for a loan?

5. How can you save your money in a real estate investment business?

Understanding real estate finance is the key to your success. Finance is the life blood of real estate. Without finance there is no real estate.

It is critical for you to understand how to finance investment property if you are to be successful with your real estate investment business. A generation ago, the only viable option for most people was to get a loan from a bank. Today, you can get mortgage finance from myriads of banks, financial institutions, lawyers' client funds, real estate companies, building societies, insurance companies, credit unions, contributory mortgage companies or even the vendors.

Banks and financial institutions that provide real estate finance look at your cash flow, equity position, credit rating and soundness of your real estate or property that you wish to buy.

Banks can be conservative with their money. This is because banks risk is greater than yours as they loan you anywhere from 60% to 100% on the market value of the property. They don't even have direct control over the asset once the loan is given. They try to protect themselves with various clauses in the mortgage document. You have to understand these clauses in the loan agreement before you sign it.

You have to be sensitive to banks advice and concerns. They are your partners in business. No bank will provide you with real estate finance if your credit rating or the reputation in the market suffers.

You have to organize your personal finances, improve your credit rating, prepare your financial information and that of the property that you wish to buy before approaching the bank for real estate finance. If you do not do your home work, lack confidence and don't present yourself properly then no bank or financial institution will give the loan.

It is important to understand that lending criteria's of the banks change from time to time. They may reject your application for a loan even if your finances are in great shape. This is because the lending criteria for a particular type of property you wish to buy may not match the lending criteria of the bank for that property. In such a situation it is wiser to approach another bank for a loan. It is better to utilize the services of a competent mortgage broker who is well informed regarding the lending policies of various banks and will guide you to the most suitable lender. At times interest rates can differ between different branches of the same bank. You can save from tens to hundreds of thousands of dollars during the life time of a loan by simply doing some research and negotiating hard. There will be times when you will need to refinance your mortgage to improve your financial position.

Understanding real estate finance is the key to your success. The secret is to find the best and cheapest source of funding of your property with least strings attached.