1. Easements and Eminent Domain T/F

Introduction to Appraisal

• An appraisal is an opinion of value, which relies significantly on the appraiser's judgment and expertise.
• Appraisal practice includes appraisal and appraisal review.
• The history of the appraisal profession began in 1929 with the first professional standards for appraisals, growing in response to appraisal requirements from the FHA, VA, and Fannie Mae.

Real Estate

• Real estate is defined as "an identified parcel or tract of land, including improvements, if any" (USPAP).
• Real estate has a bundle of rights, which can be divided into estates and encumbrances.
• Government restrictions on property rights include eminent domain, taxation, and police power.

Estates

• Freehold estates and leasehold estates are types of estates.

Encumbrances

• Financial encumbrances and nonfinancial encumbrances are types of encumbrances.
• Financial encumbrances include liens, which can be voluntary or involuntary.
• Nonfinancial encumbrances affect both title and use, and include easements, profits, and private restrictions.

Easements

• An easement is a nonexclusive right to use someone else's land for a particular purpose.
• Easements can be classified as easement appurtenant or easement in gross.
• Easement appurtenant burdens one piece of land for the benefit of another piece of land, while easement in gross benefits a particular individual or organization rather than a parcel of land.

Lien Classifications

• General liens attach to all real estate owned by the debtor, while specific liens attach only to a specific piece of the debtor's property.

Real Estate Financing Industry

• The primary market involves individual borrowers and lenders, with most residential real estate financing provided by depository financial institutions such as banks, credit unions, and savings institutions.
• The secondary market involves the sale of loans as investments, often after being packaged as mortgage-backed securities by Fannie Mae or Freddie Mac.

Appraisal Practice

• Appraisal services include estimating the value of property and reviewing the work of other appraisers.
• The purpose of an appraisal is to estimate a type of value, while the use of an appraisal is how the client will use the provided information.
• Lenders use appraisals to qualify both the borrower and the property when deciding whether to make a mortgage loan.
• Appraisers can be staff appraisers employed by an organization or fee appraisers employed by many different clients.