WHAT IS REAL ESTATE?

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Many people think of land, houses, or other sorts of buildings and structures when they hear the phrase “real estate.” Those are elements of real estate, but they aren't an exhaustive list.

The industry manual for real estate appraisers, the Uniform Standards of Professional Appraisal Practice (USPAP), defines real estate as follows: “A piece or tract of property that has been designated, including any improvements.” That mention of improvements is crucial to your knowledge of real estate because it emphasizes that real estate encompasses everything fixed or permanently tied to the land – a far larger category than most people assume.

A house, shop, office building, or other sort of construction erected on the property is considered an improvement in the real estate context. However, it may also refer to anything else permanently attached to the land, such as fences, roads, streams, trees, and even the land's utility infrastructure. Finally, real estate might contain a variety of rights that come with a piece of land, such as air rights, water rights, and mineral rights to any natural resources found under the earth.

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This is why the USPAP provides a definition for real property in its handbook, despite the fact that the terms are often interchanged. “The interests, advantages, and rights inherent in the ownership of real estate,” according to the USPAP.

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