What is Real Estate? Examining the Terms of the Trade

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You've probably heard the term "real estate" being used to describe homes and properties, but you might be surprised to learn its true definition. Today, we're going to take a closer look at what is real estate, revealing what it includes and why it's important.

 

What is Real Estate?

 


Real Estate: The Basics


Real estate can best be described as land and any tangible buildings, homes and natural resources on it. When you purchase real estate, you are buying more than just the home. You are also buying the land and natural resources (if present). Some real estate properties contain valuable resources like crops, minerals and water, all of which can increase its selling value.  


Real Estate vs Real Property


Some people assume that real estate is the same as real property, but this isn't necessarily true. Real property is a catch-all term that covers real estate as well as its bundle of rights. So, while real estate is limited strictly to physical property -- land, homes, natural resources) -- real property includes both tangible and intangible elements. Someone who buys real property receives both the real estate and common law rights. This is the fundamental difference between real estate and real property.  


Residential Real Estate


There are different types of real estate, one of which is residential. As the name suggests, residential real estate is property that is sold, rented or leased for the purpose of providing housing to individuals and families.

While there are other nuances separating residential vs commercial real estate (see below), buying residential real estate is typically a more emotional process. This is because buyers want to choose the perfect home to start a new chapter in their life, so they'll often search through dozens of different properties.  


Commercial Real Estate


Commercial real estate, on the other hand, is property that is sold, rented or leased for the purpose of achieving a business objective. When compared to residential leases, leases for commercial real estate is typically longer. Furthermore, investors calculate the profit return of commercial real estate based on profitability per square foot, which is another striking difference from residential real estate. And finally, lenders typically require a larger down payment when buying commercial real estate as opposed to residential real estate.

 



This article was brought to you by Premier Island Properties - A full service real estate firm serving Hilton Head Island and Bluffton, South Carolina. For more real estate news, information, and interesting facts about the Lowcountry, please visit our website.



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