Question

1. Why is it important to make informed decisions concerning real estate? What do virtually all decisions about the acquisition, disposition, or improvement of real estate depend on?

2. Explain the term property in terms of tangible and intangible assets.

3. Explain why real estate is viewed as a bundle of rights. Provide examples of those rights and how they are sometimes limited.

Answer 1

Answers:

1. A bundle of rights is a set of legal rights which is afforded to the real estate title holder. The legal rights can include the right of possession, the right of control, right of exclusion, right of enjoyment & right of disposition. Real estate carries with it complex set of rights & the bundle of rights is a concept which is the traditional way in which those assets are assigned.

When a person purchases a piece of property, he is not afforded to all the rights in the bundle of rights. These rights can be broken among different parties. This applies to situations where the property is leased to another party, limiting the property owner’s rights based on local landlord tenant laws & regulations.

• Right of possession is the right which is given to the title holder of the particular property.
• Right of control is the ability of title holder to use the property in any means within the jurisdiction in which the property exists.
• Right of title exclusion allows the title holder to limit who may or may not enter the property.
• Right of enjoyment is the title holder’s rights to participate in activities that he finds pleasurable.
• Right of disposition is the title holder’s right to transfer the ownership to another party at will.

2. A tangible asset is defined as an asset that has a physical form. This can include assets such as machinery, buildings & land; inventory etc. fixed assets are the assets that are used in the business for more than a year. This can include property, plant & equipment & also includes assets such as trucks, machinery, office furniture, buildings etc.

Intangible assets are generally considered to be non physical in nature. This can include goodwill, brand recognition, intellectual properties such as patents, trademarks, copyrights etc.

3. An informed decision making is an outcome that arises as a result of collaborated market efforts. A buyer becomes informed when he leverages all the necessary forces & then takes judicious decisions based on them. A collaborated effort with the agents and other stakeholders like the local government, regulatory bodies is very much necessary that makes a buyer completely informed and thereby helps in taking wise decisions.

The decision on acquisition & disposition on real estate depend on various criteria like the value of property in the market, the buyer acquiring the property would evaluate the seller before the purchase & the seller disposing the property would consider the credit worthiness of the buyer. The location of where the property is being situated, the infrastructural facilities that are located near the property, the cost of the property etc.