Question

When buying a house most buyers focus on the real estate and not the real property.  First what does this mean and how can it create any potential problems.

What kind of problems can be created with a very precise explanation please. What does this question ask for? I can think of many different ways to take this question....Thanks

Answer 1

Real estate and real property both sound very similar terms but there are certain differences between them. Real estate is a term that is used to describe the physical structure of the property be it in the form of land or building and any other physical structure attached to that and it is most common term that is used across the world and instead of real property. Real property on the other hand is a broad term that includes the physical structure be it land and building but it also includes other things like whether the buyer or the person who is renting the property has the right to modify or use the land for other purposes or may be after a period of renting buy the property at cheaper price than market. These things would not be considered in the real estate but they would be considered in the value of real property.

Lets say there is a piece of land on which there is a factory, now this is real estate, now lets say that a person who is renting the factory for 15 years have the right to buy the piece of land at a nominal price that would come with in the valuation of real property.

If we value real estate only from the point of view of physical structure then the valuation might not be that high but if you value the building from the real property point of view then the valuation would be high, we can also say that real property valuation is from the strategic point of investment.