Dreaming House

Dreaming House

Sunday, December 16, 2007

What is Real Estate?

Definition of Real Estate

  • Real Estate is often referred to as the physical land and improvements or structures constructed on the land such as buildings. Real Estate can also be defined as a business activity focuses on human activities concerned with land and its use or improvement which include professionals such as the appraisers, brokers, builders and planners.
  • The ownership rights associated with the real estate are referred to as real property.Real property is different from personal property, which refers to the ownership rights in property and is not land or property permanently attached to the land such as fixtures.
Real Property Characteristic

Real property has many unique characteristic which make them different from the products.They can be divided into two distinct characteristics, classified as physical and economics.
Physical Attributes

Immobility or Fixity

Land cannot be moved physically.Through some of its substances, such as oil,minerals and oil, may be removed but the geographical location of the land remain fixed. Due to this immobility, the value of the land keep on changing, for better or worse in line with the changes in the environment surrounding it.Land also represents a primary source of income to support local government.

Indestructibility

Land cannot be destroyed or created.It continues to exist till the end of time.This attribute tends to popularize investment in land for its economic durability where the value of land will appreciate over time because of its scarcity and indestructibility.


Heterogeneity

It is most unlikely to have two parcels of land that are exactly identical. Each parcel of land has unique location and characteristics such as size, shape and topography. Even the structure is location-specific, giving rise to the vast differences in its values.Heterogeneity causes land to be legally declared as a non-fungible(not substitute) commodity,which requires specific contract involving its uses or sale unlike others commodities such as oil, rice and shares which are fungible or legally substitutable.
Economic Attributes

In addition to the physical characteristics, land also distinct economic attributes such as scarcity, fixed investment,location and improvements.

Scarcity:

Exist when land is required for specific purpose and at specific location, creating spiraling demand for land and thus pushing its value skyrocketing. however, the ability to construct higher building and highways, provide greater accessibility to more land and hence reduce its scarcity.

Fixed Investment

The second economic attribute of land is the fixed nature of the investment of fixity , which makes the investment in land long lasting. The value may changes surrounding the location or on the changes in people's preferences and life styles. Therefore, before you purchase or improve the land you must consider how long the land's usefulness will last.

Location

The location of parcel of land in relation to other internal land use activities is called situs.Similar pieces of real estate may have extremely different values because of its location. These vast differences are bought about by the personal preferences for natural attributes, such as schools, facilities or places of employment. All these factors affect the value of the property.

Improvements

Land in its natural state is called raw land. Land with improvements in it such as buildings, fences and others is called improved land. Improvements to the land (such as access roads, nearby schools, recreational facilities and other factors) often enhance the value of the land without modifying the sites.








2 comments:

David Martin said...

Real estate is Property consisting of land and the buildings on it, along with its natural resources

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Janice Rafael said...

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