Highest and best use The use that will give the owners the greatest actual return

Real Estate Chapter 1 Flashcards Highest and best useThe use that will give the owners the greatest actual return on their investment. A property can have only one highest and best use at a time but the highest and best use can change over time.Real propertythe land, everything that is permanently attached to the land, and everything that is appurtenant to the land.Disadvantages of real estate investment-not liquid-need some degree of expert advice-rarely can investor sit idly by and watch money grow.-high degree of risk often is involved in real estate investment Factors affecting supplylabor force, construction costs, government controls, monetary or financial policies.Real estate can generally be classified into one of 5

categories:

1) Residential2) Commercial3) Industrial4) Agricultural5) Special-purpose nonhomogeneity or heterogeneity definition The uniqueness of land Factors affecting demandpopulation, demographics, and employment and wage levels

• stages of a business cycleexpansion, recession, depression, and revival

Definition of improvementAny addition or change to land or a builidng that affects the property's value is referred to as an improvement.Improvements can be "on" the land (house, fencing, etc..) or "to" the land (sewer line, sidewalk, curbing) Chattelan item of movable property MarketA market is a place where goods are bought and sold, where value for those goods is established, and where it is advantageous for buyers and sellers to trade. The real estate market is a free market and is local in nature.

Primary characteristic of personal property is: movability

Economic Characteristics of Real Property SLIPScarcity, Location, Improvements, Permanence of investment Advantages of real estate investment-can use the leverage of borrowed money to finance real estate-inflation hedge-tax advantage Physical Characteristics of Real Property Immobility- land is immobileIndestructibility- land is durable and indestructible (or permanent)Uniqueness- no two parcels of land are ever exactly the same.Real property is defined as:the land itself, the improvements thereon, and the interests, benefits, and rights inherent in the ownership of real estate (bundle of legal rights) Personal property, or personaltyall property that does not fit the definition of real property Situs definitiona related term regarding location that takes into consideration social factors in addition to exonomic factors

Brokerage definitionThe business of bringing together people interested in completing a real estate transaction is called brokerage.

Land is defined as:the earth's surface extending downward to the center of the

earth and upward to infinity, including things permanently attached by nature, such as trees and water. A specific tract of land is commmonly referred to as a parcel Real estate, or realty, is defined as:land at, above, and below the earth's surface, including all things permanently attached to it whether natural or artificial.