Concepts and definitions
1.Real estate market
Real estate market plays a determinative role in every country's economy since it is the most important asset in every citizen's portfolio. Although real estate represents only a small percentage of G.D.P., it supports the economy and significantly affects macroeconomic indexes such us consumption and investment.
1.1Characteristics of the real estate market
Real estate is considered to be a very heterogeneous product with the following characteristics:
I. High costs and low transaction number.
II. The supply curve reacts very slowly in comparison with the demand curve due to many reasons such as: land insufficiency, constructing period, license issue.
III. The options of financing vary from country to country.
IV. The tax policy has huge effect on the market.
V. In countries with high rate of owner occupancy the market moves in a slow pace.
2. Concepts and definitions
Real estate is "Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals or water, immovable property of this nature or an interest vested in this.
2.2 Real Estate valuation (or appraisal)
The act of estimating the value of real estate by a person licensed to do so. A person performing an appraisal must receive authorization from the appropriate body of the state in which he/she resides. A real estate appraisal may take into account the quality of the property, values of surrounding properties, and market conditions in the area. It is important for determining the property taxes for which the owner is liable, as well as a potential sale price, if the owner wishes to sell his/her property.
Fair value is the value of an asset or liability in an arm’s length transaction between unrelated, willing and knowledgeable parties.
Market value is the price at which an asset would trade in a competitive auction