Real Property And Real Estate Essay
Literature Review 3
Real property is defined as the benefits, rights, interests and encumbrances that are inherent in the ownership of a physically present real estate. Real estate is taken to be the land along with all the improvements that maybe permanently affixed to that land.
Real estate valuation is hence a means of providing quantitative measure of all the liabilities and benefits associated with ownership of the real estate. Different market players seek to carry out real estate valuation. These include real estate agents, assessors, appraisers, brokers, investors, property developers, lenders, mortgage lenders, market analysts and other consultants.
Practitioners and researchers who have studied the real estate market, perceive it to be a series of localized submarkets. Every micro market is perceived to have an impact on all properties that trade in that particular market. Evidence from empirical research does support this segmented market hypothesis. However not much clarity exists as to whether this segmented market perspective leads to a more efficient estimate of real estate value.
Real estate, it is often argued, is unlike other financial assets. It is perhaps one of the reasons why real estate pricing is very different from pricing of other financial assets. One such prevalent method of valuation is the construction of hedonic price index for a property with the given characteristics. This method is…