Final Paper. Final paper: Property tax and real estate market
Final Paper
The Final Paper should demonstrate a basic understanding of ethics in real estate, legal aspects of real estate, financial aspects of real estate, real estate and the economy, and the real estate valuation process. This essay should demonstrate your understanding of the course concepts as well as the implications of new knowledge of real estate principles. The focus of the Final Paper requires that you synthesize your learning and reflection in the context of the course outcomes.
Focus of the Final Paper
Submit an eight- to ten- page paper (not including the title and reference pages) on one of the topics below. You must integrate readings, class discussions, work/life experiences, and what you have learned about real estate principles.
Subprime Lending
Appraisal Industry
Mortgage Industry
Land Use in the United States
Eminent Domain
Property Tax and the Real Estate Market
Foreclosures and the Real Estate Market
Government Mortgage Programs (Fannie Mae; Freddie Mac; FHA; VA)
Insurance and the Real Estate Market
Mortgage Bankers
Mortgage Brokers
Real Estate Agent/Brokers
Building Industry
Home Mortgage Lending
Mortgage Backed Securities
REIT (Real Estate Investment Trusts)
Taxes and Real Estate
Real Estate Developers and the Real Estate Market
The paper must address each of the following and its impact on your chosen topic:
Describe the importance of ethics in real estate.
Discuss legal analysis in real estate including property rights.
Explain the financial aspects of real estate.
Evaluate real estate market dynamics.
Discuss the real estate valuation process.
Research
Students must incorporate at least five scholarly sources; two sources must be journals in addition to the text. Students should consider using the websites that are listed as recommended reading for this course as well as other credible sources from the Ashford University’s Library databases that may support their writing.
Writing the Final Paper
The Final Paper:
Must be eight to ten double-spaced pages in length (not including the title and reference pages), and formatted according to APA style as outlined in the Ashford Writing Center.
Must include a title page with the following:
Title of paper
Student’s name
Course name and number
Instructor’s name
Date submitted
Must begin with an introductory paragraph that has a succinct thesis statement.
Must address the topic of the paper with critical thought.
Must end with a conclusion that reaffirms your thesis.
Must use at least five scholarly sources; two sources must be journals in addition to the text.
Must document all sources in APA style, as outlined in the Ashford Writing Center.
Must include a separate reference page, formatted according to APA style as outlined in the Ashford Writing Center.
*Note: Students should be aware that Ashford University instructors may utilize anti-plagiarism resources to determine the originality of submitted written work. These tools compare students' work with texts available in internal databases and through Internet searches.
Carefully review the Grading Rubric (Links to an external site.)Links to an external site. for the criteria that will be used to evaluate your assignment.
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Final paper: Property tax and real estate market
Introduction
Real estate market is the general market of a property sold and purchased between sellers and buyers. Property in real estate includes residential homes, commercial buildings, industrial property, and land. More so, air rights above the land and underground rights below the ground are also considered as real estate property. On the other hand, property tax is a millage rate imposed on personal or commercial property. The tax rate is commonly computed with regards to the fair market value of the given property and becomes an obligation of the owner of the property. The property tax is a legally enforced obligation that is mostly administered by the local government. However, just like any other commercial concept, property tax, and real estate market is well defined by its market dynamics, financial aspects, legal requirements, valuation processes and ethics. Therefore, this paper seeks to discuss the impact of the above elements on the concept of property tax and real estate market.
Firstly, in the United States, real estate provides a significant percentage of wealth to people through ownership of property. For instance, in 2017 the majority of the people in the country owned their primary homes. This was credited to the unlimited growth and the lucrative aspect that real estate market offers to the people. As a result, the property tax increased significantly in all states due to increased ownership of property. Therefore, a real estate market offers all individuals and associations the opportunity to invest in tangible property through selling and buying.
On the other hand, a government policy to reduce property tax encourages more people to invest in real estate properties. For instance, the United States government initiated the first time homebuyers’ tax credit in 2009 to boost the economy. The National Association of Realtors later reported that this tax incentive alone led to many Americans purchasing homes. The motivating factor behind the vast sales was the tax incentive implemented by the national government. However, this incentive was only applicable during that particular period. Therefore, there exists a strong relationship of dependence between property tax and the real estate market.
Ethics in real estate markets and property tax play an important role in ensuring a fair environment exists for potential clients. Although there are no official state laws that govern ethical issues in real estate markets, most of the real estate agents are members of the National Association of Realtors (NAR). The NAR code of ethics prescribes the professional standards that each member must abide to. More so, the NAR code of ethics is updated on a regular basis to incorporate ethical issues deriving from the modern real estate market. In addition to the NAR code of ethics, each state in the U.S has its own principles which are enforced by the state licensing authority.
Consequently, the main impact of real estate ethics is to promote the right to use, own, transfer and exchange property at ease. Therefore, ethics in real estate ensure that the market is free from corrupt practices that may create an unfair advantage over the various parties in the market. This can only occur if discrimination, misrepresentation, fraud, and exaggeration of facts are avoided, (Roulac, 2013). This ensures prices of property in the market are only influenced by external factors which are beyond control. As a result of positive ethical conditions prevailing in the market, buyers will be more confident to engage in transactions and boost the real estate economy.
Additionally, the existence of a fair market ensures that property tax is also correctly computed by the local or state authority. Property tax is mostly calculated using the fair market value of the property which can only be revealed when the market condition is stable. In addition, due to the strong ethical standards, real estate agencies and professionals will only act in good faith. For instance, property owners will only pay reasonable millage rates since there will be a minimum or zero cases of dishonest from the state real estate officials. More so, property owners will be encouraged to pay the rates due to the confidence they have in the market. Therefore, high standards of ethical values create competitive but efficient real estate markets that help in determining the right amount of property tax.
Furthermore, there are property rights which describe how real estate property can be owned and used. Generally, property rights under the law allow the owner of the property to use it as he or she sees fit. The four main elements of property rights include; right to use the property, right to earn income from the property, right to transfer the property to others, and the right to enforce property rights. Becky (2014) summarizes this bundle of rights by arguing that ownership should involve the right to own the proceeds generated by the property and having total control over the property. Furthermore, under these rights, owners can be individual people, associations or governments. Therefore, property rights generally help to define the role, ownership, and structure of how real estate markets present themselves.
More so, individuals and associations actively engage in the real estate market when their property rights are safeguarded. This is because it is easier to buy, sell, rent, or lease a property when the structure of ownership is clearly defined. More so, enforcement of property rights ensures there are few legal disputes of ownership of property and their proceeds. In addition, it is also easier to enforce property tax when owners have complete control over their property. For instance, the state officials will have records indicating the real owners of all properties in their respective jurisdiction. Therefore, it will be easier to get such people to pay the millage rate since they cannot deny the ownership.
Financial aspects in real estate include the financial instruments that are used in transactions among the buyers, investors and sellers. Unlike other investment opportunities, real estate or properties are not considered to be liquid investment instruments, since commercial or individual real estate is not interchangeable. As a result, identifying a suitable real estate or land in which to invest in can take a considerable amount of time and effort. However, real estate potential investors usu...