A piece of real estate has three distinct elements:
Each of these elements can hold separate title and be sold separately. Therefore, it is possible for one person to own the surface rights to a piece of land, while another party owns the mineral rights (subsurface), and a third party owns the air rights (air space).
When you purchase a piece of real estate, your rights to the surface, subsurface and air space of the property depends on whether these rights were ever severed from the property and sold to someone else in the past.
Real property refers to a piece of land and includes any improvements permanently attached to the land. Houses, outbuildings, fencing, decking and landscaping are examples of real property.
Personal property refers to items on a piece of land that are movable, or not permanently attached to the land. Cars, furniture and livestock are examples of personal property.
WHAT DOES CONVEY MEAN?
In real estate, “convey” is used to describe personal property included in the sales price of a home. For example, if a seller wants to leave the refrigerator for the buyers, the fridge is said to convey with the home.
However, if the seller wants to remove anything considered real property from the home, such as the draperies, the home listing will state the drapes “do not convey”. This lets buyers know the drapes are not part of the sale.
WHY IS THIS IMPORTANT?
The difference between real and personal property can become a very serious point of contention between buyers and sellers as misinterpretations by one of the parties can lead to contracts being terminated or law suits filed!
Therefore, to avoid these potential pitfalls, it’s important for everyone to to know which items convey with a house when it sells in NWA, and which don’t.
Property values are driven by the balance between supply (the number of homes for sale), and demand (the number of buyers). Therefore, economic conditions like population growth, employment rates, available capital, and income can all affect value.
At the end of the day, what a piece of real estate is worth is subjective, as the land or home is “worth” what someone is willing to pay for it. However, most buyers purchase real estate with the help of a mortgage note and lenders will only give a buyer the funds to support what they determine the value of a property to be through the services of an appraiser.
An appraiser evaluates a property based on specific criteria in order to give a professional determination of value. Appraisers may take in to consideration the property’s location, condition, the market, similar properties that have recently sold, restrictions, zoning and city growth plans.
Real estate is considered a major US economic activity and is heavily regulated by state and federal laws.
The real estate market is often referred to in terms of property values. If the market is good, then property values are up. If the market is bad, then property values are down. The recent growth in NWA has made our real estate market “good”. The number of people moving to the area (30+ people/day) has increased the ability for current homeowners to sell their homes and has encouraged the construction of new homes to meet new population demands.
A buyer’s market refers to situations where the number of homes for sale (supply) is greater than the number of buyers looking to purchase a home (demand). This scenario means the negotiating advantage is in the hands of the buyers who have more housing options available to them. Buyers can be more selective in finding a home and take more time to consider all their options.
The three major types of real estate are residential, commercial and industrial.
Residential real estate refers to the sale or rental of land and houses to people for the purpose of daily living. Examples include single-family homes, condominiums, co-ops, townhouses, multi-family homes and vacation homes.
Commercial real estate refers to the sale or leasing of land and buildings to businesses for the purpose of commerce. Examples include retail centers, office buildings, restaurants, schools, hotels, apartment buildings and warehouses.
Industrial real estate includes land and buildings, such as a factories, which are designed with the purpose of researching or manufacturing products.
Properties are grouped into one of these categories based on how the land (and the buildings on the land) are zoned.
Zoning is the creation of specific areas, or zones, within a city that dictate how real estate in those areas can be used (residential, commercial or industrial).
Zoning can also dictate how buildings look, with regulations to control things like height, color, size, landscaping, or the distance to the street and surrounding buildings.
City planning committees use zones to increase the organization of the city, help create a sense of community, support future infrastructure and growth, and protect the health and safety of its citizens. More importantly for you, zoning helps maintain property values by keeping like-kind residential properties together and loud, smelly factories far away.
In areas with rapid growth, like Northwest Arkansas, it’s possible that areas will need to be re-zoned to accommodate for this growth. Therefore, it’s in your best interest to research city growth plans for zoning and infrastructure changes that could affect your property, or the property you are interested in purchasing.