Real Estate INTRODUCTION India Real Estate market has been seeing multi level rise in the past

few years. If industry sources are to be believed, this upward graph has no sign of coming down or even lying flat for few more years to come. The facts that major real estate companies in India are going public, proves the potential of the Indian property market. Starting from infrastructure development to residential comple , commercial real estate to retail space development India property market is booming with all kinds of activities. Thanks to the !overnment approval of "##$ %&I in India real estate development and steady capital market, some all time big investments are being made in the real estate sector. 'uyers from all across the world are showing interest and Indian property now features at the top of the list of the international real estate investors. In this conte t, RealEstate(nline.in provides a common platform for Indian property owners, potential buyers ) property dealers in India. *e have comprehensive listings of residential ) commercial property in all the major as well as the second tier cities in India, including real estate in 'angalore, +umbai, &elhi, ,gra, -yderabad, !urgaon, .hennai, /une, 0olkata, 1oida and so on.

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Mission To be known as the leading !roup in the real estate arena 2 known for providing 3uality, futuristic and environment2friendly residential and commercial solutions on time. To be known as the leading !roup in the real estate arena 2 known for providing 3uality, futuristic and environment2friendly residential and commercial solutions on time. To be known as the leading !roup in the real estate arena 2 known for providing 3uality, futuristic and environment2friendly residential and commercial solutions on time. Our Vision To provide true value2for2money residential and commercial realty solutions to our clients. ,nd in the process build a relationship of mutual trust with not only our clients but with all our associates... to make sure that all of us grow together bigger and stronger Real estate or immovable property is a legal term 4in some jurisdictions5 that encompasses land along with anything permanently affi ed to the land, such as buildings. Real estate 4immovable property5 is often considered synonymous with real property 4also sometimes called realty5, in contrast with personal property 4also sometimes called chattel or personality5. -owever, for technical purposes, some people prefer to distinguish real estate, referring to the land and fi tures themselves, from real property, referring to ownership rights over real estate. The terms real estate and real property are used primarily in common law, while civil law jurisdictios refer instead to immovable property. In law, the word real means relating to a thing 4from 6atin res/rei, thing5, as distinguished from a person. Thus the law broadly distinguishes between 7real7 property 4land and anything affi ed to it5 and 7personal7 property 4everything else, e.g., clothing, furniture, money5. The conceptual difference was between immovable property, which would transfer title along with the land, and movable property, which a person would retain title to.
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Business sector *ith the development of private property ownership, real estate has become a major area of business. /urchasing real estate re3uires a significant investment, and each parcel of land has uni3ue characteristics, so the real estate industry has evolved into several distinct fields. Specialists are often called on to valuate real estate and facilitate transactions. Some kinds of real estate businesses include8

,ppraisal8 /rofessional valuation services 'rokerages8 ,ssisting buyers and sellers in transactions &evelopment8 Improving land for use by adding or replacing buildings /roperty management8 +anaging a property for its owner4s5 Real Estate +arketing8 +anaging the sales side of the property business Real Estate Investing8 +anaging the investment of real estate Relocation services8 Relocating people or business to a different country

*ithin each field, a business may speciali9e in a particular type of real estate, such as residential, commercial, or industrial property. In addition, almost all construction business effectively has a connection to real estate. 7Internet Real Estate7 is a term coined by the internet investment community relating to the parallel that e ists between high 3uality internet domain names and real2world, prime real estate. +any internet companies actually use the address of properties as domain names. Le els ,ccording to The Economist, 7developed economies:7 assets at the end of ;##; was

Residential property8 <=> trillion .ommercial property8 <"= trillion E3uities8 <;# trillion !overnment bonds8 <;# trillion .orporate bonds8 <"? trillion
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Total8 <""@ trillion

That makes real estate assets @=$ and financial assets =A$ of total stocks, bonds, and real estate assets. ,ssets not counted here are bank deposits, insurance 7reserve7 assets, and human assetsB also it is not clear if all debt and e3uity investments are counted in the categories e3uities and bonds. %or C.S. asset levels see %R'8 D." Release22 %low of %unds ,ccounts of the Cnited States. Mort"a"es in real estate In recent years, many economists have recogni9ed that the lack of effective real estate laws can be a significant barrier to investment in many developing countries. In most societies, rich or poor, a significant fraction of the total wealth is in the form of land and buildings. In most advanced economies, the main source of capital used by individuals and small companies to purchase and improve land and buildings is mortgage loans 4or other instruments5. These are loans for which the real property itself constitutes collateral. 'anks are willing to make such loans at favorable rates in large part because, if the borrower does not make payments, the lender can foreclose by filing a court action which allows them take back the property and sell it to get their money back. %or investors, profitability can be enhanced by using an off plan or pre2 construction strategy to purchase at a lower price which is often the case in the pre2construction phase of development. 'ut in many developing countries there is no effective means by which a lender could foreclose, so the mortgage loan industry, as such, either does not e ist at all or is only available to members of privileged social classes. Real estate econo#ics Real estate econo#ics is the application of economic techni3ues to real estate markets. It tries to describe, e plain, and predict patterns of real estate prices, building production, and real estate consumption. The closely related fields of $ousin" econo#ics is narrower in scope, concentrating on residential real estate markets as does the research of real estate tren%s focus on the business and structural changes impacting the industry. 'oth draw on partial e3uilibrium analysis 4supply and demand5, urban economics, spatial economics, e tensive research, surveys and finance.

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O er ie' o( real estate #ar)ets The main participants in real estate markets are8

O'ner*User 2 These people are both owners and tenants. They purchase houses or commercial property as an investment and also to live in or utili9e as a business. O'ner 2 These people are pure investors. They do not consume the real estate that they purchase. Typically they rent out or lease the property to someone else. Renter 2 These people are pure consumers. De elopers 2 These people prepare raw land for building which results in new product for the market. Renovators 2 These people supply refurbished buildings to the market. %acilitators 2 This includes banks, real estate brokers, lawyers, and others that facilitate the purchase and sale of real estate.

The ownerEuser, owner, and renter comprise the demand side of the market, while the developers and renovators comprise the supply side. In order to apply simple supply and demand analysis to real estate markets a number of modifications need to be made to standard microeconomic assumptions and procedures. In particular, the uni3ue characteristics of the real estate market must be accommodated. These characteristics include8

Dura+ility 2 Real estate is durable. , building can last for decades or even centuries, and the land underneath it is practically indestructible. 'ecause of this, real estate markets are modeled as a stockEflow market. ,bout F>$ of supply consists of the stock of e isting houses, while about ;$ consists of the flow of new development. The stock of real estate supply in any period is determined by the e isting stock in the previous period, the rate of deterioration of the e isting stock, the rate of renovation of the e isting stock, and the flow of new development in the current period. The effect of real estate market adjustments tend to be mitigated by the relatively large stock of e isting buildings. ,etero"eneous 2 Every piece of real estate is uni3ue, in terms of its location, in terms of the building, and in terms of its financing. This makes pricing difficult, increases search costs, creates information

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asymmetry and greatly restricts substitutability. To get around this problem, economists 4beginning with +uth 4"FA#55 define supply in terms of service units, that is, any physical unit can be deconstructed into the services that it provides. (lsen 4"FAF5 describes these units of housing services as an unobservable theoretical construct. -ousing stock depreciates making it 3ualitatively different from a new building. The market e3uilibrating process operates across multiple 3uality levels. %urther, the real estate market is typically divided into residential, commercial, and industrial segments. It can also be further divided into subcategories like recreational, income generating, area, historicalEprotected, etc. ,i"$ Transaction costs 2 'uying andEor moving into a home costs much more than most types of transactions. These costs include search costs, real estate fees, moving costs, legal fees, land transfer ta es, and deed registration fees. Transaction costs for the seller typically range between ".@ 2 A$ of the purchase price. In some countries in .ontinental Europe, transaction costs for both buyer and seller can range between "@ 2 ;#$. Lon" ti#e %elays 2 The market adjustment process is subject to time delays due to the length of time it takes to finance, design, and construct new supply, and also due to the relatively slow rate of change of demand. 'ecause of these lags there is a great potential for dise3uilibrium in the short run. ,djustment mechanisms tend to be slow, relative to more fluid markets. Bot$ an in est#ent "oo% an% a consu#ption "oo% 2 Real estate can be purchased with the e pectation of attaining a return 4an investment good5, or with the intention of using it 4a consumption good5, or both. These functions can be separated 4with market participants concentrating on one or the other function5 or can be combined 4in the case of the person that lives in a house that they own5. This dual nature of the good means that it is not uncommon for people to over2 invest in real estate, that is, to invest more money in an asset than it is worth on the open market. I##o+ility 2 Real estate is locationally immobile 4save for mobile homes, but the land underneath them is still immobile5. .onsumers come to the good rather than the good going to the consumer. 'ecause of this, there can be no physical market2place. This spatial fi ity means that market adjustment must occur by people moving to dwelling units, rather than the movement of the goods. %or e ample, if tastes change and more people demand suburban houses, people must
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find housing in the suburbs, because it is impossible to bring their e isting house and lot to the suburb 4even a mobile home owner, who could move the house, must still find a new lot5. Spatial fi ity combined with the close pro imity of housing units in urban areas suggests the potential for e ternalities inherent in a given location. De#an% (or $ousin" The main determinants of the demand for housing are demographic. -owever other factors like income, price of housing, cost and availability of credit, consumer preferences, investor preferences, price of substitutes and price of compliments all play a role. The core demographic variables are population si9e and population growth8 the more people in the economy, the greater the demand for housing. 'ut this is an oversimplification. It is necessary to consider family si9e, the age composition of the family, the number of first and second children, net migration 4immigration minus emigration5, non2family household formation, and the number of double family households, death rates, divorce rates, and marriages. In housing economics, the elemental unit of analysis is not the individual as it is in standard partial e3uilibrium models. Rather, it is households that demand housing services8 typically one household per house. The si9e and demographic composition of households is variable and not entirely e ogenous. It is endogenous to the housing market in the sense that as the price of housing services increase, household si9e will tend also to increase. Income is also an important determinant. Empirical measures of the income elasticity of demand in 1orth ,merica range from #.@ to #.F 4&e 6eeuw, %. "FG"5. If permanent income elasticity is measured, the results are a little higher 40ain and Huigley "FG@5 because transitory income varies from year2 to2year and across individuals so positive transitory income will tend to cancel out negative transitory income. +any housing economists use permanent income rather than annual income because of the high cost of purchasing real estate. %or many people, real estate will be the most costly item they will ever buy. The price of housing is also an important factor. The price elasticity of the demand for housing services in 1orth ,merica is estimated as negative #.G

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by /olinsky and Ellwood 4"FGF5, and as negative #.F by +aisel, 'urnham, and ,ustin 4"FG"5. ,n individual householdIs housing demand can be modeled with standard utilityEchoice theory. , utility function, such as CJC4K", K;, K?, K=...Kn5, can be constructed in which the households utility is a function of various goods and services 4Ks5. This will be subject to a budget constraint such as /"K"L/;K;L.../nKnJM, where M is the households available income and the /s are the prices for the various goods and services. The e3uality indicates that the money spent on all the goods and services must be e3ual to the available income. 'ecause this is unrealistic, the model must be adjusted to allow for borrowing andEor saving. , measure of wealth, lifetime income, or permanent income is re3uired. The model must also be adjusted to account for the heterogeneousness of real estate. This can be done by deconstructing the utility function. If housing services 4K=5 is separated into the components that comprise it 4D", D;, D?, D=,...Dn5, then the utility function can be rewritten as CJC4K", K;, K?, 4D", D;, D?, D=,...Dn5...Kn5 'y varying the price of housing services 4K=5 and solving for points of optimal utility, that household:s demand schedule for housing services can be constructed. +arket demand is calculated by summing all individual household demands. Supply o( $ousin" -ousing supply is produced using land, labour, and various inputs such as electricity and building materials. The 3uantity of new supply is determined by the cost of these inputs, the price of the e isting stock of houses, and the technology of production. %or a typical single family dwelling in suburban 1orth ,merica, appro imate percentage costs can be broken down as8 ac3uisition costs "#$, site improvement costs ""$, labour costs ;A$, materials costs ?"$, finance costs ?$, administrative costs "@$, and marketing costs =$. +ulti2unit residential dwellings typically break down as8 ac3uisition costs G$, site improvement costs >$, labour costs ;G$, materials costs ??$, finance costs =$, administrative costs "G$, and marketing costs @$. /ublic subdivision re3uirements can increase development cost by up to ?$ depending on the jurisdiction. &ifferences in building codes account for about a ;$ variation in development costs. -owever these subdivision and building code costs typically increase the market value of the buildings by at least the amount of their cost outlays. , production function such as HJf46,1,+5 can be constructed in which H is
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the 3uantity of houses produced, 1 is the amount of labour employed, 6 is the amount of land used, and + is the amount of other materials. This production function must, however, be adjusted to account for the refurbishing and augmentation of e isting buildings. To do this a second production function is constructed that includes the stock of e isting housing, and their ages, as determinants. The two functions are summed yielding the total production function. ,lternatively an hedonic pricing model can be regressed. The long2run price elasticity of supply is 3uite high. !eorge %allis estimates it as >.; 4%allis, !. "F>@5, but in the short run supply tends to be very price inelastic. Supply price elasticity depends on the elasticity of substitution and supply restrictions. There is significant substitutability both between land and materials, and between labour and materials. In high2value locations, multi2story concrete buildings are typically built to reduce the amount of e pensive land used. ,s labour costs increased since the "F@#s, new materials and capital intensive techni3ues have been employed to reduce the amount of relatively e pensive labour used. -owever supply restrictions can significantly affect substitutability. In particular the lack of supply of skilled labour 4and labour union re3uirements5, can constrain the substitution from capital to labour. 6and availability can also constrain substitutability if the area of interest is delineated 4that is, the larger the area, the more suppliers of land, and the more substitution that is possible5. 6and use controls such as 9oning bylaws can also reduce land substitutability. T$e a%1ust#ent #ec$anis#

The basic adjustment mechanism is a stockEflow model to reflect the fact that about F>$ the market is comprised of e isting stock and about ;$ consists of the flow of new buildings.
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In the diagram to the right, the stock of housing supply is presented in the left panel while the new flow is in the right panel. There are four steps in the basic adjustment mechanism. %irst, the initial e3uilibrium price 4Ro5 is determined by the intersection of the supply of e isting housing stock 4S,5 and the demand for housing 4D5. This rent is then translated into value 4Vo5 via discounting cash flows. Nalue is calculated by dividing current period rents by the discount rate, that is, as a perpetuity. Then value is compared to construction costs 4CC5 in order to determine whether profitable opportunities e ist for developers. The intersection of construction costs and the value of housing services determine the ma imum level of new housing starts 4,So5. %inally the amount of housing starts in the current period is added to the available stock of housing in the ne t period. In the ne t period, supply curve S, will shift to the right by amount ,So. A%1ust#ent 'it$ %epreciation

The diagram to the left shows the effects of depreciation. If the supply of e isting housing deteriorates due to wear, then the stock of housing supply depreciates. 'ecause of this, the supply of housing 4S,o5 will shift to the left 4to S,15 resulting in a new e3uilibrium price of R1. The increase of prices from Ro to R1 will shift the value function up 4from Vo to V15. ,s a result, more houses can be produced profitably and housing starts will increase 4from ,So to ,S15. Then the supply of housing will shift back to its initial position 4S,1 to S,o5.

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Increase in %e#an%

The diagram on the right shows the effects of an increase in demand in the short run. If there is an increase in the demand for housing, such as the shift from Do to D1 there will be either a price or 3uantity adjustment, or both. %or the price to stay the same, the supply of housing must increase. That is, supply S,o must increase by ,S. Increase in costs

The diagram on the left shows the effects of an increase in costs in the short2 run. If construction costs increase 4say from CCo to CC15, developers will find their business less profitable and will be more selective in their
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ventures. In addition some developers may leave the industry. The 3uantity of housing starts will decrease 4,So to ,S15. This will eventually reduce the level of supply 4from S,o to S,15 as the e isting stock of housing depreciates. /rices will tend to rise 4from Ro to R15. Real estate tren%s Real estate tren%s is a generic term used to describe any consistent pattern or change in the general direction of the real estate industry which, over the course of time, causes a statistically noticeable change. This can be a result of the economy, a change in mortgage rates, consumer speculations, or other fundamental and non2fundamental reasons. , real estate trend is the catalyst for the change, and it is usually a concept, a belief, a philosophy, or an event. Sometimes a real estate trend evolves to meet a specific need, while others evolve when new products or solutions are launched. %or e ample, when more lenders began offering creative financing products, more borrowers were able to afford a mortgage 4at least on paper5. ,t other times, a trend from another industry spills over into the real estate industry and is adopted. Therefore, a trend must have substance and be based on fact. (ver time, it will cause pattern of change. +onitoring changes and tracking trends is a not an e act science and can be very hard to predict. The residential real estate brokerage industry is appro imately half way through a "# 2"@ year industry transition. This major shift is creating a fundamental change in the way homes are being bought and sold and the role the real estate agents are playing therein.

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Real estate +ro)er Real estate +ro)er is a party who acts as an intermediary between sellers and buyers of real estate and attempts to find sellers who wish to sell and buyers who wish to buy. In the Cnited States, the relationship was originally established by reference to the English common law of agency with the broker having a fiduciary relationship with his clients. Estate agent is the term used in the Cnited 0ingdom to describe a person or organi9ation whose business is to market real estate on behalf of clients. In the CS, real estate brokers and their salespersons 4commonly called 7real estate a"ents7 or, in some states, 7brokers75 assist sellers in marketing their property and selling it for the highest possible price under the best terms. *hen acting as a 'uyer:s agent with a signed agreement 4or, in many cases, verbal agreement, although a broker may not be legally entitled to his commission unless the agreement is in writing5, they assist buyers by helping them purchase property for the lowest possible price under the best terms. *ithout a signed agreement, brokers may assist buyers in the ac3uisition of property but still represent the seller and the seller:s interests. In most jurisdictions in the Cnited States, a person is re3uired to have a license in order to receive remuneration for services rendered as a real estate broker. Cnlicensed activity is illegal, but buyers and sellers acting as principals in the sale or purchase of real estate are not re3uired to be licensed. In some states, lawyers are allowed to handle real estate sales for compensation without being licensed as brokers or agents. T$e %i((erence +et'een salespersons an% +ro)ers In the past, when brokers 4and their agents5 only represented sellers, the term OIreal estate salespersonII may have been more appropriate than it is today, given the different ways that brokers and their agents can help a buyer through the process rather than simply PsellII him or her a property. 6egally however, the term :salesperson: is still used in many states to describe a real estate agent. Real estate e%ucation8 In order to become licensed, most states re3uire that an applicant take a minimum number of classes before taking the state licensing e am. Such education is often provided by real estate brokerages as a means to finding new agents.

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Today in many states, the real estate agent 4acting as an agent of the broker with whom heEshe is employed5 is re3uired to disclose to prospective buyers and sellers who represents whom. See below for a brokerEagentIs relationship to sellers and their relationship to buyers. *hile some people may refer to any licensed real estate agent as a real estate broker, a licensed real estate a"ent is a professional who has obtained either a real estate salesperson4s license or a real estate broker:s license. In the Cnited States, there are commonly two levels of real estate professionals licensed by the individual states, but not by the federal government8 Real estate salesperson 4or, in some states, Real estate +ro)er5 *hen a person first becomes licensed to become a real estate agent, heEshe obtains a real estate salesperson:s license 4or some states use the alternative term, 7broker75 from the state in which heEshe will practice. If you want to obtain a real estate license, the candidate must take specific coursework 4of between =# and F# hours5 and then pass a state e am on real estate law and practice. In order to work, salespersons must then be associated with 4and act under the authority of5 a real estate broker. +any states also have reciprocal agreements with other states, allowing a licensed individual from a 3ualified state to take the second state:s e am without completing the course re3uirements, or, in some cases, take only a state law e am. Real estate +ro)er 4or, in some states, 5uali(yin" Bro)er5 ,fter gaining some years of e perience in real estate sales, a salesperson may decide to become licensed as a real estate broker 4or /rincipalEHualifying broker5 in order to own, manage or operate hisEher own brokerage. .ommonly more course work and a broker:s state e am on real estate law must be passed. Cpon obtaining a broker:s license, a real estate agent may continue to work for another broker in a similar capacity as before 4often referred to as a +ro)er associate or associate +ro)er5 or take charge of hisEher own brokerage and hire other salespersons 4or broker5 licensees. 'ecoming a branch office manager may or may not re3uire a broker:s license. Some states such as 1ew Mork allow licensed attorneys to

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become real estate brokers without taking any e am. In some states, such as .olorado, there are no 7salespeople7, as all licensees are 'rokers. , RE,6T(R, pronounced PReal2torQ, is a real estate salesperson or broker who is a member of the 1ational ,ssociation of Realtors 41,R5. ,ll Realtors are brokersEsalespersons, but not all brokersEsalespersons are Realtors. A"ency relations$ips 'it$ clients ersus Non6A"ency relations$ips 'it$ custo#ers

A"ency relations$ip8 Traditionally, the broker provides a conventional full2service, commission2based brokerage relationship under a signed listing agreement with a seller or 7buyer representation7 agreement with a buyer, thus creating under common law in most states an agency relationship with fiduciary obligations. The seller or buyer is then a client of the broker. Some states also have statutes which define and control the nature of the representation.

,gency relationships in residential real estate transactions involve the legal representation by a real estate broker 4on behalf of a real estate company5 of the principal, whether that person or persons is a buyer or a seller. The broker 4and hisEher licensed real estate agents5 then becomes the agent of the principal.

Non6a"ency relations$ip8 where neither written agreement nor fiduciary relationship e ists, a real estate broker 4and his agents5 works with a principal who is then known as the brokerIs customer. *hen a buyer, who has not entered into a 'uyer ,gency agreement with the broker and buys a property, then that broker functions as the sub2agent of the sellerIs broker. *hen a seller chooses to work with a transaction broker, there is no agency relationship created.

Transaction +ro)ers Some state Real Estate .ommissions, notably %lorida:s after "FF; 4and e tended in ;##?5 and .olorado:s after "FF= 4with changes in ;##?5, created the option of having no agency nor fiduciary relationship between brokers and sellers or buyers. -aving no more than a facilitator relationship, transaction brokers assists buyers, sellers, or both during the transaction
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without representing the interests of either party who may then be regarded as customers. ,s noted by the South 'roward 'oard of Realtors, Inc. in a letter to State of %lorida legislative committees 8 7The Transaction 'roker crafts a transaction by bringing a willing buyer and a willing seller together and assists with the closing of details. The Transaction 'roker is not a fiduciary of any party, but must abide by law as well as professional and ethical standards.7 4such as 1,R .ode of Ethics5 The result was that in ;##?, %lorida created a system where the default brokerage relationship had 7all licensees Roperating as transaction brokers, unless a single agent or no brokerage relationship is established, in writing, with the customerQ and the statute re3uired written disclosure of the transaction brokerage relationship to the buyer or seller customer only through Suly ", ;##>. In both %lorida and .olorado:s case, dual agency and sub2agency 4where both listing and selling agents represented the seller5 no longer e ist. Dual or li#ite% A"ency &ual agency occurs when the same brokerage represents both the seller and the buyer under written agreements. Individual state laws vary and interpret dual agency rather differently. +any states no longer allow dual agency. Instead, Transaction Brokerage 4see above5 provides the 'uyer and Seller with a limited form of representation, but without any fiduciary obligations 4see %lorida law5. 'uyers and sellers are generally advised to consult a licensed real estate professional for a written definition of an individual state:s laws of agency, and many states re3uire written &isclosures to be signed by all parties outlining the duties and obligations.

If state law allows for the same agent to represent both the buyer and the seller in a single transaction, the brokerageEagent is typically considered to be a Dual Agent. Special lawsErules often apply to dual agents, especially in negotiating price.

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In some states 4notably +aryland5, &ual ,gency can be practiced in situations where the same brokerage 4but not agent5 represent both the buyer and the seller. If one agent from the brokerage has a home listed and another agent from that brokerage has a buyer2brokerage agreement with a buyer who wishes to buy the listed property, &ual ,gency occurs by allowing each agent to be designated as Pintra2 companyQ agent. (nly the broker himself is the &ual ,gent. Some states do allow a broker and one agent to represent both sides of the transaction as dual agents. In those situations, conflict of interest is more likely to occur.

Types o( ser ices t$at a +ro)er can pro i%e Since each state:s laws may differ from others, it is generally advised that prospective sellers or buyers consult a licensed real estate professional. Some E amples8

.omparative +arket ,nalysis 2 an estimate of the home:s value compared with others. This differs from an appraisal in that property currently for sale may be taken into consideration 4competition for the subject property5. E posure 2 +arketing the real property to prospective buyers. %acilitating a /urchase 2 guiding a buyer through the process. %acilitating a Sale 2 guiding a seller through the selling process. %S'( document preparation 2 preparing necessary paperwork for 7Sale 'y (wner7 sellers. %ull Residential ,ppraisal 2 but only, in most states, if the broker is also licensed as an appraiser. -ome Selling 0its 2 guides to how to market and sell a property. -ourly .onsulting for a fee, based on the client:s needs. 6easing for a fee or percentage of the gross lease value. /roperty +anagement. E changing property. ,uctioning property. /reparing contracts and leases. 41ot in all states.5

These services are also changing as a variety of real estate trends re2engineer the industry.

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7eneral The sellers and buyers themselves are the principals in the sale, and real estate brokers 4and the broker:s agents5 are their agents as defined in the law. -owever, although a real estate agent commonly fills out the real estate contract form, agents are typically not given power of attorney to sign the real estate contract or the deedB the principals sign these documents. The respective real estate agents may include their brokerages on the contract as the agents for each principal. The use of a real estate broker is not a re3uirement for the sale or conveyance of real estate or for obtaining a mortgage loan from a lender. -owever, once a broker is used, the settlement attorney 4or party handling closing5 will ensure that all parties involved be paid. 6enders typically have other re3uirements, though, for a loan. Ser ices pro i%e% to +ot$ +uyers an% sellers In addition to the services to sellers and buyers described below, most real estate agents coordinate various aspects of the closing. Real estate brokers 4and their agents5 typically do not provide title service such as title search or title insurance, do not conduct surveys or formal appraisals of the property such as those re3uired by lenders, and do not act as lawyers for the parties, although they may 7coordinate7 these activities with the appropriate specialists. Some real estate brokers may be associated with loan officers who may help to finance buyers to make their purchase. Regardless of whether a real estate agent assists sellers or buyers of real estate, negotiation and financing skills are important.

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T$e 8listin"8 contract Several types of listing contracts e ist between broker and seller. These may be defined as8

E clusive Right to Sell

In this type of ,greement7, the broker is given the e clusive right to market the property and represents the seller e clusively. This is referred to as Seller ,gency. -owever, the brokerage also offers to co2operate with other brokers and agrees to allow them to show the property to prospective buyers and offers a share of the total real estate commission.

E clusive ,gency

,n alternative form, 7E clusive ,gency7, allows only the broker the right to sell the property, and no offer of compensation is ever made to another broker. In that case, the property will never be entered into an +6S. 1aturally, that limits the e posure of the property to only one agency.

(pen 6isting

This is an ,greement whereby the property is available for sale by any real estate professional that can advertise, show, or negotiate the sale. *hoever first brings an acceptable offer would receive compensation. Real estate companies will typically re3uire that a written agreement for an open listing be signed by the seller to ensure the payment of a commission if a sale should take place. ,lthough there can be other ways of doing business, a real estate brokerage usually earns its commission after the real estate broker and a seller enter into a listing contract and fulfill agreed2upon terms specified within that contract. The seller:s real estate is then listed for sale, fre3uently with property data entered into a +ultiple 6isting Service 4+6S5 in addition to any other ways of advertising or promoting the sale of the property. In most of 1orth ,merica, where brokers are members of a national association 4such as 1,R in the Cnited States or the .anadian Real Estate ,ssociation5, a listing agreement or contract between broker and seller must include the following8 starting and ending dates of the agreementB the price at which the property will be offered for saleB the amount of compensation
MBA 1ST SEMESTER 12

due to the broker and how much, if any, will be offered to a co2operating broker who may bring a buyer. *ithout an offer of compensation to a co2 operating broker 4co2op percentage or flat fee5, the property may not be advertised in the +6S system. Bro)era"e co##issions In consideration of the brokerage successfully finding a satisfactory buyer for the property, a broker anticipates receiving a commission for the services the brokerage has provided. Csually, the payment of a commission to the brokerage is contingent upon finding a satisfactory buyer for the real estate for sale, the successful negotiation of a purchase contract between a satisfactory buyer and seller, or the settlement of the transaction and the e change of money between buyer and seller. In 1orth ,merica commissions on real estate transactions are negotiable and have been under pressure for numerous reasons the average commission has declined during the last decade from A$ to about @$. Real estate commission is typically paid by the seller at the closing of the transaction as detailed in the listing agreement. , growing alternative commission structure is the fee2for2service, fi ed2fee, a la carte or flat2fee structure. Real estate trends have caused the unbundling of real estate brokerage services and according to the ;##G Swanepoel Trends Report rising costs and cost2conscious consumers are now e ploring new innovative business models such as a la carte, multi2level marketing, residual, auctioneering and other discount or online real estate models. RES9A Real estate brokers who work with lenders may not receive any compensation from the lender for referring a client to a specific lender. To do so would be a violation of a 4CS5 federal law known as the Real Estate Settlement /rocedures ,ct 4RES/,5. ,ll compensation to a broker must be disclosed to all parties.

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Loc)+o: *ith the sellersI permission, a lockbo is placed on homes that are occupied and, after arranging an appointment with the home owner, agents can show the home. *hen a property is vacant or where a seller may be living elsewhere, a lockbo will generally be placed on the front door. The listing broker helps arrange showings of the property by various real estate agents from all companies associated with the +6S. The lockbo contains the key to the door of the property and the bo can only be opened by licensed real estate agents 4often only with authori9ation from the listing brokerage5, by using some sort of secret combination or code provided by the brokerage or the issuer of the lockbo . 6ockbo es come in two varieties 2 mechanical and electronic. +echanical lockbo es utili9e a combination dial or special mechanical key and are readily purchased at local home improvement centers or over the internet. +echanical lockbo es offer the most basic protection of the homeowner:s key and therefore e pose the most risk of unmonitored or potentially unauthori9ed access to the home during the sales process. The risk stems primarily from an agent forgetting to change the combination after each sale. The fre3uency of use of mechanical lockbo es by agents has steadily declined due to the availability of more secure electronic lockbo es. Electronic lockbo es increase the level of security because agents wishing to show a property must have a valid electronic key to open the bo . The electronic key must be renewed or refreshed at regular intervals by the agent otherwise the key deactivates itself preventing access to the lockbo contents. Electronic keys can range from credit card si9ed smart cards to a separate electronic bo . In addition to greater security, electronic lockbo es typically record all key access activity internally. This access log can be downloaded and reviewed by the listing agent to determine the date, time and person accessing the lockbo . Electronic lockbo es also offer a host of other features such as controlling allowed showing times, homeowner privacy modes, special showing restrictions etc.

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S$are% co##issions 'it$ co6op +ro)ers If any buyer:s broker 4or any of hisEher agents5 brings the buyer for the property, the buyer:s broker would typically be compensated with a co2op commission coming from the total offered to the listing broker, often about half of the full commission from the seller. If an agent or salesperson working for the buyer:s broker brings the buyer for the property, then the buyer:s broker would commonly compensate his agent with a fraction of the co2op commission, again as determined in a separate agreement. , discount brokerage may offer a reduced commission in the event no other brokerage firm is involved and no co2op commission is paid out. If there is no co2commission to pay to another brokerage, the listing brokerage receives the full amount of the commission minus any other types of e penses. 9otential points o( contention (or a"ents Real estate commissions are becoming a point of controversy. -ome values in many areas have 3uadrupled over the past ;# years. This may be contributing to the increased number of licensed agents and growing competition between them. The number of real estate agents in areas tends to rise when home values do, and the productivity of e isting agents goes down. The rewards have increased, but so have the demands of clients and business risks faced by agents. In 1orth ,merica, agents have had to become familiar with marketing through the internet as well as traditional print and other media. ,dditionally the law is complicated with issues such as defects in housing, grow houses and other issues of which the agent is the front line defense for his client. There is more liability than ever in advising buyers and sellers. ,nother controversy e ists for the commissions to real estate agents. If a listing agent sells a property for any amount above the listed price, he in turn will make additional income. In theory, this will motivate himEher to get top dollar price for his client, the seller. -owever, if the agent representing the buyer attempts to obtain a lower sales price for his client, then heEshe would make a lower commission. Thus, it could be considered to be in the agent:s best interest to advise his client to purchase the property at a higher price.

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In practical terms, there is rarely a great enough difference between the listing 4asking5 price and the negotiated selling price to make a significant difference between the commissions generated on each side, and certainly hardly enough to justify an agent failing in his fiduciary duty to obtain the best terms for hisEher client. ,nother potential conflict of interest e ists when a listing agent in a very active real estate market has incentive to sell properties 3uickly at unnecessarily low prices in order to benefit from a high volume of sales. In any case, agents who create satisfied clients and develop subse3uent referrals are likely to do far better in the long run. Real estate +ro)ers an% +uyers Ser ices pro i%e% to +uyers; Buyers as clients *ith the increase in the practice of buyer brokerage in the CS, especially since the late "FF#s in most states, agents 4acting under their brokers5 have been able to represent buyers in the transaction with a written 7'uyer ,gency ,greement7 not unlike the 76isting ,greement7 for sellers referred to above. In this case, buyers are clients of the brokerage. Some real estate brokerages choose only to represent buyers in an e clusive buyer:s agency relationship and do not take 7listings7 from sellers. , real estate brokerage attempts to do the following for the buyers of real estate only when they represent the buyers with some form of written buyerbrokerage agreement8

%ind real estate in accordance with the buyersI needs, specifications, and cost. Takes buyers to and shows them properties available for sale. *hen deemed appropriate, prescreens buyers to ensure they are financially 3ualified to buy the properties shown 4or uses a mortgage professional to do that task5. 1egotiates price and terms on behalf of the buyers and prepares standard real estate purchase contract by filling in the blanks in the contract form. The buyer:s agent acts as a fiduciary for the buyer.

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&ue to the importance of the role of representing buyers: interests, many brokers who seek to play the role of client advocate are now seeking out the services of .ertified +ortgage /lanners, industry e perts that work in concert with .ertified %inancial /lanners to align consumers: home finance positions with their larger financial portfolio4s5.

Buyers as custo#ers

In most states, until the "FF#s, buyers who worked with an agent of a real estate broker in finding a house were custo#ers of the brokerage, since the broker represented only sellers. Today, state laws differ. 'uyers andEor sellers may be represented. Typically, a written 7'uyer 'rokerage7 agreement is re3uired for the buyer to have representation 4regardless of which party is paying the commission5, although by hisEher actions, an agent can create representation.

%ind real estate in accordance with the buyersI needs, specifications, and affordability. Take buyers to and shows them properties available for sale. *hen deemed appropriate, prescreen buyers to ensure they are financially 3ualified to buy the properties shown 4or uses a mortgage professional to do that task5. ,ssist the buyer in making an offer for the property.

T$e i#pact o( "lo+ali<ation on real estate +ro)ers4 acti ities !lobali9ation has had an immediate and powerful impact on real estate markets, making them an international working place. The rapid growth of the Internet has made the international market accessible to millions of consumers. , look at recent changes in homeownership rates illustrates this. +inority homeownership jumped by =.= million during the "FF#s, reaching ";.@ million in ;###, according to the %annie +ae %oundation. %oreign direct investment in C.S. real estate has increased sharply from <?> billion in "FFG more than <@# billion in ;##; according to .ensus data. +ost local real estate agents view the foreign market as a significant revenue potential and may have already worked with international clients in their local market, new immigrants or more sophisticated investors from different cultures and from other countries. %or e ample, they are providing value2 added services to an overseas relocation employee figure out which
MBA 1ST SEMESTER 2&

inoculations his or her children will need as well as the steps needed to register a car in the Cnited States. Real estate brokers want to keep central to the transaction, protect the best interests of their members and address the uni3ue needs of each multicultural global client by ac3uiring speciali9ed training and designations. 4See below for more5 Recently the +e ican association of real estate practitioners in +e ico, ,+/I, and the 1,R, 1ational ,ssociation of Realtors in the CS, signed a bilateral contract for international real estate business cooperation. ,lso at the local level, many other state and local associations are helping other countries achieve the same result. %or instance, in 1ew +e ico, a historically multicultural state, under the R,1+, Realtor ,ssociation of 1ew +e ico and the /residentIs ,dvisory .ouncil, is looking into forming an ambassador association to help a foreign country into signing a bilateral agreement with the 1,R. In 1ew +e ico, there are =@## licensed real estate professionals and only "= or "@ .I/S designees, out of whom, only A speak a language other than English. Real estate +ro)ers * a"ents an% (urt$er e%ucation In addition to completing the educational re3uirements for a state real estate license, most states issue real estate licenses for limited time periods and re3uire real estate professionals to complete a certain number of hours of further education on an annual or biannual basis in order to renew their licenses. Re3uired course hours range from "# to ;# per license period. Typically, some specific courses are re3uired to be takenB these would include real estate law updates. NAR e%ucational re=uire#ents an% reco"ni<e% %esi"nations ,s adherents to 1,R:s .ode of Ethics, Realtors are re3uired to update their ac3uaintance with the .ode every = years by taking a course, available on2 line or 7live7. -owever, Realtors, as members of 1,R, also have the option of studying for additional certifications in a variety of specialties, several of which are backed by 1,R with offerings of certification and update courses available nationwide.

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The most well known 1,R sponsored designations are the following8

Accre%ite% Buyer Representati e 4,'R5. The Real Estate 'uyers ,gent .ouncil has over =#,### members and is the largest association of real estate professionals focusing on all aspects of buyer representation. (f the RE',. members, over ?#,### have completed RE',.Is two2day course and provided documentation of buyer agency e perience. 6inked to the ,'R is the ,'R+, ,ccredited 'uyer Representative +anager 4,'R+5 for managers. Accre%ite% Lan% Consultant 4,6.5. ,6.Is are the recogni9ed e perts in land brokerage transactions of all kinds of speciali9ed land services including farms and ranches, raw land sales and development. Certi(ie% Co##ercial In est#ent Me#+er 4..I+5. ..I+s are recogni9ed e perts in commercial real estate brokerage, leasing, valuation and investment analysis. There are more than G,@## designees and an e3ual number of candidates principally in 1orth ,merica, but also in ,sia and Europe. Certi(ie% 9roperty Mana"er 4./+5. !eared to real estate property management specialists, designees handle all forms of management from residential to commercial to industrial. Certi(ie% Real Estate Bro)era"e Mana"er 4.R'5. The designation is awarded to RE,6T(RST who have completed the .ouncil:s advanced educational and professional re3uirements. .R' designees consistently increase their level of industry knowledge, advance their earning and career potential, increase their firmIs profitability and benefit from active involvement in our network of real estate professionals. Certi(ie% Resi%ential Specialist 4.RS5. &esignees, with ==,### members 2 =$ of 1,R members 2 who average =? transactions per year and earn four times as much as the average Realtor, belong to the .ouncil of Residential Specialists which is the largest affiliate of 1,R. They are involved in over ;G$ of all transactions because the consumer prefers to work with a more knowledgeable and seasoned brokers or agents. Re3uirements for this designation include a total of at least ;@ transactions 4or specific << volume of sales5 over a specific
1ST SEMESTER 2.

MBA

time period, significant e perience, as well as complete rigorous educational re3uirements.

Certi(ication (or Internet 9ro(essionalis# 4e2/R(5. ,n e2/R( is a Realtor who has undergone a new training program presented entirely online in order to be certified as Internet /rofessionals. 1,R is the first major trade group to offer certification for online professionalism which involves all aspects of doing business on the internet. Certi(ie% International 9roperty Specialist 4.I/S5. Realtors with the .I/S designation have both hands2on e perience in international real estate transactions, *hether traveling abroad to put transactions together, assisting foreign investors, helping local buyers invest abroad, or serving an immigrant niche in local markets. .I/S designees have also successfully completed an intensive program of study focusing on critical aspects of transnational transactions, including currency and e change rate issues and cross2cultural relationships, regional market conditions, investment performance, ta issues and more. The .I/S network is comprised of ",@## real estate professionals from @# countries who deal in all types of real estate. Counselor o( Real Estate 4.RE5. , .RE designee is one of only ","## by2invitation2only members of an international group of professionals who provide seasoned, objective advice on real property and land2related matters. 7ra%uate o( t$e Realtors> Institute 4!RI5. The !RI designation is held by "F$ of Realtors and courses are offered through state Realtor ,ssociations with F# hours of coursework on marketing and servicing listed properties to real estate law. In a ;##? survey, 1,R has determined that !RIs earned over <??,;## more annually than non2 designees. Real Estate 9ro(essional Assistant 4RE/,5. &esigned for administrative assistants or employees of Realtors 4who may or may not hold a real estate license5, a two2day certificate course provides an intensive introduction to the real estate business and to the specific ways support staff can become valuable assets to their employers.

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2/

C$an"in" In%ustry The real estate brokerage industry is appro imately half way through a "# 2"@ year industry transition. This major shift is creating a fundamental change in the way homes are being bought and sold and the role the real estate agents are playing therein and many new real estate brokerage models are evolving. .ompensation has traditionally been based on a percentage of the sales price, split between the buying and selling brokers, and then between the agent4s5 and hisEher real estate agency. *hile a split based on the percentage received by the broker is generally normal, in some brokerages agents may pay a monthly 7desk fee7 for office costs, monthly fee, etc. and then retain "##$ of the commission received. The business and compensation structures are however changing as the real estate trends create various new real estate models and real estate related services such as Dillow, Red fin, Trulia, /oint;, -ouse values, Realestate.com and RealEstateStoreCS,.com.

T$e Dan"erous Disconnect Bet'een ,o#e 9rices an% ?un%a#entals

Today:s home prices can best be described as a recession in the making, but are most often referred to as a bubble. /rices have grown so much in the last decade that they are now completely disconnected from the fundamentals that have historically ruled the real estate market. Today:s prices are not sustainable and the graphs and analysis below demonstrate why.

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T$e Disconnect Bet'een @a"es an% ,o#e 9rices

/rice increases are nothing new, since home values tend to go up over time. *hat makes this housing bubble different 4besides the fact that it is the largest bubble in C.S. history5 is the dangerous disconnect between home prices and the basic fundamentals that typically rule the housing market. %or e ample, increases in home prices typically keep pace with increases in wages. 'ut this has not happened. 1ational median home prices have increased by more than =@ percent in the last decade 4when adjusted for inflation5. +edian wages per worker, on the other hand, have only increased by "# percent in the same period. ,s a result, for almost the first time ever, individuals who are making the median household income cannot afford to buy a median priced home. In order to 3ualify buyers for loans, lenders loosened credit regulations and encouraged risky mortgage products like interest2only loans, negative amorti9ation loans and ,R+ loans. This made it easier to get a mortgage, but admittedly much harder to keep it.

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In recent years, a large portion of the buyers bought out of their price range. In many cases, their loan 3ualification was based on a teaser rate andEor an interest2only mortgage payment. 1ow that the interest rate is due to reset on these loans, millions will not be able to afford their mortgage and will likely lose their homes to foreclosure. T$e Disconnect Bet'een Rents an% ,o#e 9rices ,lso disconcerting is the disconnect between rents and home prices. ,t one point, the only thing that stopped most people from buying versus renting was lack of a down payment. Sure, it cost a little more each month to buy 2 but not much. 'ut thanks to the housing boom, everything has changed. -ome price increases have far outpaced rent increases, rising =@ percent in the last ten years. In the same time period, rents, like wages, increased by only "# percent. 1ationally, it now costs A# percent less to rent than it does to buy. 'ut for some reason, this hasn:t stopped people from buying. 'etween "FF@ and present day, the homeownership rate has soared. In contrast, the number of people who rent has declined for the first time since **II. Since we already know that rising wages and lower home prices were a factor, the increase in homeownership can be easily traced back to the lenders who loosened credit and mortgage lending restrictions. Thanks to these lenders, buyers who would have never stood a chance of getting a mortgage just a few years ago were now being approved for outrageous amounts of money.

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T$e Disconnect Bet'een ,o#e 9rices an% ,o#e Sales ,lthough the disconnect between home prices and home sales was not present during the housing boom, it most certainly is now. The public has either lost interest or simply can:t afford to buy into the current housing market. -ome sales have slowed nationally, and are down significantly in cities within .alifornia, %lorida, 1evada, +ichigan and (hio. ,s a result, supply has now e ceeded demand in most areas. It would take several months, and in some cases years, to sell all of the homes that are currently on the market. Met, home prices are staying level for the most part 2 for now. If sales do not pick up soon, home prices will most definitely begin to fall.

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S,RI ARIS,NA REALESTATE A7ENCB ,E?, 6,K+I 1,R,M,1, S(.IETM R(,& 1( ", S(!ES-*,RM U 4E5, +C+',I2=###A#. ST,TCS ,SSESS. ME,R !IRE/,1 1( 8 8 8 @/,RTE1ERS ;##>2;##F S+,+S;AF@1E*d

COM9UTATION O? TOTAL INCOME

BUSINESS INCOME 1ET/R(%IT ,S /ER 'CSI1ESS >=,FG#.##

OT,ER SOURCES

1I6

!R(SS T(T,6 I1.(+E T(T,6 T,K,'6E I1.(+E T,K,'6E I1.(+E R(C1&(%% uEs ;>>, I1.(+E T,K /,M,'6E

>=,FG#.## >=,FG#.## >=,FG#.## 1I6

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S,RI ARIS,NA ESTATE A7ENCB

9RO?IT AND LOSS ACOUNT for the year ended ?"st +arch, ;##>

9articulars
To Shop Rent To Telephone E penses To Electricity To /rofession Ta To .onvinces To Repair ) +aintenance To Stationary To &epreciation To +iscellaneous E penditures To 1et /rofit

RsC
",;#,### "@,### G,@## ;",#># @,### 1I6 @,### A,F@# A,@## >=,FG#

9articulars
'y Telephone 'y .ommission Received

RsC
G;,### ;,##,###

2D/2D33 3

2D/2D333

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!!

S,RI ARIS,NA ESTATE A7ENCB

BALANCES,EET ,s on ?"st +arch, ;##>

Lia+ilities
.apital

RsC
?,##,###

Assets
%i ed ,ssets 8 6ess8 &epreciation ==,@## A,F@#

RsC
?G,@@#

,dd8

1et /rofit

>=,FG#

Investment &eposit8

1I6 "@;@##

+T16 Electricity Shop 'ank8 %i ed &eposit .urrent ,Ec .ash ,t -and

@#,### ;,@## ",##,### "@#### ",##,### @#,### ==,F;#

!D0&D2/ 3

!D0&D2/3

MBA

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!&

S,RI ARIS,NA REALESTATE A7ENCB ,E?, 6,K+I 1,R,M,1, S(.IETM R(,& 1( ", S(!ES-*,RM U 4E5, +C+',I2=###A#. ST,TCS ,SSESS. ME,R !IRE/,1 1( 8 8 8 @/,RTE1ERS ;##F2;#"# S+,+S;AF@1E*d

COM9UTATION O? TOTAL INCOME

BUSINESS INCOME 1ET/R(%IT ,S /ER 'CSI1ESS ", ;F,?##.##

OT,ER SOURCES

1I6

!R(SS T(T,6 I1.(+E T(T,6 T,K,'6E I1.(+E T,K,'6E I1.(+E R(C1&(%% uEs ;>>, I1.(+E T,K /,M,'6E MBA 1ST SEMESTER

", ;F,?##.## ", ;F,?##.## ", ;F,?##.## 1I6 !-

S$ri Aris$na Estate A"ency

9ro(it E Loss Account %or the year ended ?"st +arch, ;##F

9articulars
Rent Telephone

RsC
",;#,### "@,###

9articulars
'y Telephone 'y .ommission Received

RsC
G@,A## ;,@#,###

Electricity .onveyance Repair ) +aintanous

>,### A,### ;,###

Stationary &ep. +is.e p /rofession 1et profit

@,### A,F@# >,### ;A,?@# ",;F,?##

!D2-D.33

!D2-D.33

S$ri Aris$na Estate A"ency

MBA 1ST SEMESTER !.

BALANCES,EET ,s on ?"st +arch, ;##F

Lia+ilities
'al. 'E&

RsC
",F=,F;#

Assets
%i ed ,ssets 8 6ess8 &epreciation ?G,@@# A,F@#

RsC
?#,A##

,dd8

1et /rofit

",;F,?## A,?G@

Investment &eposit8

1I6 ",@;,@##

,dd82 'ank Int.

+T16 Electricity Shop 'ank8 %i ed &eposit .urrent ,Ec .ash ,t -and

@#,### ;,@## ",##,### ",=#,### ",##,### =#,### G,=F@

!D!3D-2 -

!D!3D-2-

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!/

RATIO>s 9roprietary Ratio6 /roprietary Ratio is a test of the financial and credit strength of the business. It is related with shareholders funds and total assets. This ratio determines the long term or ultimate solvency of the business. It is also called P Net orth to Total Assets !atioQ or PE"uity !atioQ or PAssets Backing !atioQ or PNet orth !atio# Shareholders funds comprise of ordinary share capital, preference share capital and all items of reserves and surplus. Total assets include all tangible assets and only those intangible assets which have a definite reali9able value.

9roprietary Ratio F 9roprietors ?un%s : 133 Total Assets 9roprietors ?un% F E=uity S$are Capital G 9re(C Capital G Capital Reser e G Re C ResC H ?ictitious Assets Total Assets F All ?i:e% Assets G All Current Assets G In est#entsC OR 9RO9RIETARB RATIO F 9roprietors> ?un%s : 133 Total ?un%s Total ?un%s F O'ne% ?un%s G +orro'e% ?un%s Si"ni(icance an% O+1ecti es /roprietary ratio shows the e tent to which shareholders own the business and thus indicates the general financial strength of the business. The higher the proprietary ratio, the greater the long term stability of the company and conse3uently greater protection to creditors. -owever, a very high proprietary ratio may not necessarily be good

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because if funds of outsiders are not used for long term financing, a firm may not be able to take advantage of trading e3uity.

2330;6
?, ##,### K "## J G>."?$ ?, >=,###

2332;6
?, ;=,;;# K "## J F>.#G$ ?, ?#,@F@ (ur proprietary ratio indicates the higher growth of financial strength of our business which is greater for long term stability of the company ) conse3uently greater protection to the creditors.

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S$ri Aris$na Ice Crea# 9arlor

9ro(it E Loss Account %or the year ended ?"st +arch, ;##>

9articulars
Telephone +aintainous Electricity Stationary +arketing Intrest .harges 1et profit

RsC
?,A## F,A## G;,### ;,### =,### ;F,FG@ ";,###

9articulars
'y Income 'y (rder Received

RsC
",#>,"G@ ;@,###

1D!!D1/-

1D!!D1/-

MBA

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&3

S$ri Aris$na Ice Crea# 9arlor

BALANCES,EET ,s on ?"st +arch, ;##>

Lia+ilities
.,/IT,6

RsC
G,##,###

Assets

RsC

,dd8

1et /rofit

";,### ;,=#,###

%i ed ,ssets 8 6)' F,A#,### 6ess8 &ep. =>,### F,";,### %an "AAA ",@# 425 dep. "AA # Investment 1I6 &eposit8 +T16 Electricity %ridge .ash ,t -and ?,### ;,@## "@,### ;#,@## ">,###

'ank 6oan ?,##,### 42582Repayment A#,###

2D-2D333

2D-2D333

MBA

1ST SEMESTER

&1

S$ri Aris$na Ice Crea# 9arlor

9ro(it E Loss Account %or the year ended ?"st +arch, ;##F

9articulars
Telephone +aintanous Electricity Stationary +arketing Interest .harges 1et profit

RsC
?,A## F,A## G;,### ;,### =,### ;F,FG@ "=,;@#

9articulars
'y Income 'y (rder Received

RsC
",#?,=;@ ?;,###

1D!-D&2-

1D!-D&2-

MBA

1ST SEMESTER

&2

S$ri Aris$na Ice Crea# 9arlor

BALANCES,EET ,s on ?"st +arch, ;##F

Lia+ilities
.apital 'al bEd

RsC
G,##,### ";,###

Assets
%i ed ,ssets 8 6)' F,";,### 6ess8 &ep. =@,A## %an "@## 425 dep. "@# Investment &eposit8 +T16 Electricity %ridge .ash ,t -and ?,### ;,@## "@,###

RsC
>,AA,=## ",?@ # 1I6

,dd8

1et /rofit

"=,;@# ",>#,###

'ank 6oan ;,=#,### 42582Repayment A#,###

;#,@## ">,###

2D3.D2-3

2D3.D2-3

MBA

1ST SEMESTER

&!