Real Estate for Beginners
If you look around you, you probably see more and more buildings rising and housing units being built or already built. This is because real estate can be a very lucrative business for both property owners and investors. Investing in real estate can be a substantial source of income and a way to increase your net worth. Of course, as with every thing that brings forth financial rewards, investing in real estate requires a lot of risk and work. For instance, not doing your research could make you choose a disaster-prone property, which in effect could make you lose millions easily! That is why it is important to be educated, and licensed, when it comes to the real estate business.
If you are new to the real estate industry but is keen on learning the ropes, it may be best for you to start with the basics. To help you get started with all the real estate jargon, here is a list of fundamental terms and concepts every real estate owner and investor should know before purchasing and/or selling properties.
Terms and Concepts
Real Estate has two categories: Real and Personal. Real properties or realty is land and whatever permanent entities are attached to it. Personal property refers to anything that is not attached to land.
A fixture is any personal item/property that has been converted to real property because it has been attached to a land or building. For example, chandeliers are still considered personal property when they are bought from the store. Once they are attached to the building, they become real property.
A listing agreement and an agreement of sale is a contract, which indicates the items considered as fixtures. It is vital for any buyer or investor to read this agreement carefully so you would know what items you will or will not be getting upon the purchase of property.
A contingency is a condition of the sale that allows a party of the sale to walk away if not met. Typical contingencies include loan contingency (obtaining a satisfactory loan for the home), appraisal contingency (home is worth what “I” am paying for), inspection contingency (home inspection satisfies buyer).
Once you have bought the property, you actually gain several rights known as the “bundle of right”. These include the right of ownership, which stipulate that you have the right to occupy, to use, allow others to use, rent, restrict, construct building, keep others off, leave, and abandon your property.
Ownership of real property can also be included in a trust. A trust is a legal instrument that is used to protect family ownership interests.
Title refers to the legal evidence of ownership one has over a property. Title usually includes documents such as Tax Declarations, Real Property Tax Receipts, and Deeds of Sale. What most considers as a title is actually the Certificate of Title, or also known as the Torrens Title. This is the best form of legal evidence for land ownership.
A deed is a document that conveys title of property to the owner. If you get confused between deed and title, think of it this way – title is a right whilst deed is a document.