3 ways to describe "Real Estate" - answer✔✔1. identify the tangible assets of land and buildings
2. denote the bundle of rights associated with the ownership of property
3. activities related to the acquisition, operation, disposition of physical assets
durability - answer✔✔poorly built real estate and the effects of decisions in real estate last a long
time
lumpiness - answer✔✔real estate gets added to the market in relatively large chunks, hard to
determine when to start a big development project
imperfect information - answer✔✔impossible to know the value of real estate, seller typically
knows more about a property than the buyer does
price dispersion - answer✔✔range of potential values for a property, no single known value
high transaction costs - answer✔✔brokerage fees (5-10%), search costs, reduces the return of
flipping houses
immobility - answer✔✔supply cannot be shifted to another market = surpluses and shortages can
co-exist
consume a product, consume the location (unavoidable)
perfect heterogeneity - answer✔✔impossible for two locations to have the same location, every
property has a location monopoly, no perfect substitutes
1. user market
2. financial/capital market
3. government sector - answer✔✔Which markets is real estate influenced by?
personal rights - answer✔✔derive from the Constitution and Bill of Rights
property rights - answer✔✔oldest notion of the law
includes:
1. exclusive possession
2. use and enjoyment
3. dispostion
surface rights - answer✔✔rights to the land and everything permanently attached to it, includes
raw land, improvements to the land (clearing, rezoning), and improvements on the land
(buildings)
subsurface rights - answer✔✔rights to the ground below the the surface of the property
air rights - answer✔✔rights to the reasonable distance above the surface of your property, relates
to the interference of enjoyment (drones)
fixtures - answer✔✔an object formerly personal property, but becomes real property through
attachment
freehold interests - answer✔✔a property that you have the rights to/own for an indefinite period
of time, like a house
leasehold interests - answer✔✔a property you have the right to for a definite period of time, like
renting
fee simple estate - answer✔✔technical term for owning real estate, characteristics include:
alienable, inheritable, descendible
alienable - answer✔✔ability to transfer any part of property to someone else
inheritable - answer✔✔property can be passed down through generations
descindable - answer✔✔owner dies w/o a will, property goes to next living relative
fee simple absolute - answer✔✔most complete bundle of property rights, standard, greatest value
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