Real estate

Immovable property is a type of property recognized as immovable by law.

Real estate by origin includes land plots, subsoil plots and everything that is firmly connected with the land, that is, objects that cannot be moved without disproportionate damage to their purpose, including buildings, structures, objects of unfinished construction.

Real estate can be the subject of leasing. Pledging real estate, as well as obtaining a loan secured by real estate, is usually called a mortgage.

In Roman law, the transfer of ownership of real estate could be effected by a simple transfer, devoid of any form of transfer, and the establishment of an easement or mortgage could be effected by a simple contract between one person and another, unknown to third parties.

According to German customary law, the transfer of land from hand to hand was subject to various rather complicated formalities (symbolic transfer of land, investiture, Auflassung).

In connection with the reception of Roman law, the old Germanic public forms of real estate transactions began to fall into oblivion. But this harmed the development of mortgages. A lender who made a loan secured by real estate could never be sure that there were no other pre-established mortgage rights on the same property; As a consequence, such loans were fraught with great risk and were therefore given under very heavy conditions.

In this regard, at the end of the eighteenth century, the institution of the mortgage note, or mortgage books, arose in Europe: any mortgage on real estate was now legally valid for third parties only when it was recorded in special books kept by official institutions and open to the information of all interested persons. There is no other mortgage right in the mortgage book, and then his priority for satisfaction from this property was guaranteed.

But in the interests of the creditors, it was desirable that not only mortgage rights, but all rights to real estate in general, should be visible from the book: the creditor sought to protect himself in case the mortgagor turned out to have no right of ownership or some other proprietary rights were discovered in his real estate that significantly reduced the value of the estate, for example, the right of lifetime use by third parties.

In view of this, during the nineteenth century, mortgage books throughout Europe became land registers. A rule was established that any act of proprietary significance (transfer of ownership, establishment of a pledge or easement, etc.) must be recorded in the land register, and only from that moment does it acquire legal force. This is the so-called principle of publicity of all proprietary legal acts on real estate (or in other words, the principle of introduction). The principle of the reliability of land registers was also adopted: any entry in the register has full legal force for third parties, even if it does not correspond to reality. Interested persons may seek correction of the land register, but until it is corrected, it is considered to be true.

Real estate valuation

Real estate appraisal is one of the most common types of appraisal activities and includes determining the value of the property. At the same time, several types of values are determined, the most common in practice are: market, liquidation, replacement, substitution, etc.

Market value

Market value characterizes the value of an object in the current market, while it should be borne in mind that the market value is the cost at which the object will be purchased by a prudent buyer who has all the necessary information. As a rule, this value is used in purchase and sale transactions, pledge of the property, determination of lease payments, etc.

This cost is the most important to estimate for an ordinary person, because it reflects the real prevailing price at which transactions can be carried out.

Several factors play a role in the formation of the market price:

Economic. An increase in the standard of living and the emergence of savings leads to a surge in demand, because real estate is considered the most reliable and conservative way to save
The development of bank lending lowers the bar for real estate buyers, causing an increase in their number, which, together with a limited supply, creates strong pressure on the price "from below".
Limited supply – in the conditions of modern cities, it is difficult to find a place for construction, which leads to low rates of construction, and together with the need to implement social programs (housing for those on the waiting list, military, etc.) creates a shortage of supply.

Psychological factor – buyers, when making a purchase decision, make a comparison of options based on current price levels. And the concept of "expensive"/"cheap" is formed under the influence of average market prices for a particular property. That is, if the property is higher than the average market price for similar properties, then it is "expensive", and if it is lower, then it is "cheap". At the same time, not the absolute, but the relative value of the property is taken into account.
In the current real estate market, a so-called comparative analysis of such properties is carried out to determine the Market Price. The prices of the offers are compared, all other things being equal. The offer price may differ from the purchase price (transaction price) due to bargaining or special terms of the transaction. For primary analysis and tracking of the price trend, the concept of average price is used.

Salvage value

This is the value that can be obtained by selling the property being appraised for a limited period of time. This value is always lower than or equal to the market value.

Replacement cost

This is the cost of construction of a new building or structure, used mainly in the execution of insurance contracts, under which, in the event of an insured event, a payment is made equal to the cost of the new structure without taking into account depreciation (depreciation).

Replacement cost

This is the cost of constructing a new building/structure, taking into account the accumulated depreciation. This value is used to determine the market value (the cost of the land plot is added to it) and when assigning insurance payments, it is at this cost that WTC skyscrapers were insured.

Documents required for real estate expertise
documents indicating the physical boundaries of the real estate objects, which may include a copy of geodetic plans or maps with a description and designation of the location of the objects to be evaluated,
documents from the Bureau of Technical Inventory,
data on buildings and structures available on the territory of the real estate objects to be evaluated,
documents confirming the ownership of the land,
documents on the encumbrance of this real estate object (if any), which include documents on pledge, lease, agreements, contracts, special taxes, debt obligations, etc.)

Real estate development

Real estate development, from the point of view of its material content, includes two main components:

carrying out construction or other works on buildings and land;
Changes in the functional use of buildings or land.

Property taxation

In international practice, the principle of taxation of real estate at the place of its location is applied. But real estate, as well as income from it, can be additionally taxed at the place of residence of the owner. In some cases, double taxation may be present.

When buying a property, there is a transfer of ownership, accompanied by the payment of taxes in various forms: land tax, transfer tax, stamp duty, etc. These taxes can be 5% or more of the purchase price. In particular, in Greece, these taxes can reach up to 11%.

In many countries, when buying a new property, sales tax or VAT is not paid on the transfer of ownership. The VAT rate in most European countries is around 20%. Under continental civil law, as a rule, the payment of notary and registration fees is also required.

In common law countries, transactions are recorded by the State in institutions equivalent to the Bureau of Technical Inventory and/or the Cadastre. In the countries of the British Commonwealth, the Torrens system (a central database that is the source of indisputable rights to real estate) is usually used.

Mobile real estate
The very idea of mobile homes is not new, but it has become relevant again in connection with the mortgage crisis of 2008 in the United States: over the year, their production increased by 19%, and the clients of companies producing such "real estate" are doctors, lawyers, and pensioners. In addition, a mobile home cannot be seized on the basis of court and writs of execution, and the funds spent on the construction of such housing are returned in 2-3 months (instead of losses at 20-year bank loan rates). Another advantage is that you can build a house both on your own plot of land and on a rental one. Mobile homes are made using modern technologies, are as comfortable as possible, relatively cheap and do not require a large amount of building materials. The cost of a mobile home depends on its size — from $50,90 to $630,2.

Real estate as an investment object
Pros:

Security. Investments in real estate (about 15-25% of the ownership structure) allow you to hedge the risk of stocks and bonds.
Yields are higher than inflation.
Stability and predictability. Renting out real estate provides an opportunity to receive a relatively stable income.
Cons:

Low liquidity — you won't be able to quickly get money by selling an asset.
The need to spend time maintaining an asset.
Additional risks: fire, flooding, theft, etc.
Low yields (compared to stocks and bonds).
In 2016, the world's richest people invested an average of 35% of their wealth in residential and commercial real estate.