Tayson Rockefeller, Author at Teton Realty Blog

Real property vs Real Estate and the Bundle of Rights

January 1, 2017 By Tayson Rockefeller 1 Comment

Alright, commonly we hear the term real estate and just assume it is just that. Property, house, something associated with improvements on land or just bare land. This is correct, any buildings that are permanently attached to the property (note that a shed on skids would be considered personal property) are referred to as improvements. Real estate normally includes resources or minerals that are under the land or water rights, unless they are specifically excluded, usually at the time of transfer. The same goes for the air rights, or the space above the surface of the Earth. This can also be limited to a certain distance as we start to think about airplanes and their right to travel over your property. Even though you may own the space, it can also be limited by County height limitations, and this can be further convoluted when high-rise buildings or condos come into play. In these instances the homeowner’s association may own the building footprint, while you own the inside of the condo.

Now that we have a general idea of what is inclusive with regards to real estate, we start to understand that real estate typically refers to physical elements. So what is Real Property? What is the difference?

Real property is basically an expanded concept in terms of real estate. Not only does it include everything I mentioned above, but also what we refer to in the real estate industry as the “Bundle of Rights”, or simply, Real Property Rights.

So, Real Estate + Bundle of Rights = Real Property.

In order to conclude, we need to understand what the Bundle of Rights are. While Real Estate would be considered physical, the Bundle of Rights are not. This is a legal element. In Real Estate training, have all these weird acronyms to help us remember the different elements for various terms. The acronym for the bundle of Rights is DEEP + C, or:

Disposition – Essentially, this right protects the owner’s ability to transfer ownership, either permanently by virtue of a sale or temporarily by leasing the property.

Enjoyment – This one’s pretty self-explanatory, it gives you the right to enjoy or to participate in activities that the owner of the property enjoys.

Exclusion – This gives the owner of the ability to limit who can access the property. No trespassing…

Possession – Another right that is seemingly self-explanatory, it gives the owner the right to possess the property.

Control – Allows the owner to use the property the way they see fit.

It is important to remember that the above bundle of rights do not go without restriction. A good example is possession. Usually, if you do not pay your property taxes, the county can take possession of your property. If you are in a platted subdivision, you cannot control every element of your property as there are restrictions in place that you agree to when you take possession of the property. There are of course many other scenarios in which the above rights can be limited.

In any case, at least now we know the difference!

Building a Home? New Construction Tips, Q & A

December 22, 2016 By Tayson Rockefeller 2 Comments

In anticipation of new construction in the coming year, I thought I would run through a couple of frequently asked questions and provide a bit of advice for new home shoppers.

Does a new home lose value?

In general, real estate appreciates. We are finally seeing some new construction, and likely to see loads more this coming season. With that said, most of the homes you might compare with were built in, or around 2007. While I don’t think demand will diminish, or necessarily increase, I think the prices will likely stabilize because of the higher supply. Nothing drastic, but there will be more supply than there is now. Regardless, the newer homes will likely have a slight premium, but I wouldn’t look at it as if you are driving a new car off the lot. While real estate appreciates, it also comes with maintenance and repairs. The homes we’re seeing on the market today are already a third through their roof life span, assuming it’s a comp shingle or similar. In this regard, it’s sixes. Buy the house you like.

Does new construction cost more?

This question goes hand-in-hand with the last. I talked about the increase in supply which should reduce prices, but only to a certain degree. Remember that new construction only comes if it pays for itself. I think it’s going to cost more, but probably not substantially more than the prorated share of future maintenance that will come sooner than when purchasing a new home.

Should I get a home warranty?

It depends what you are referring to. If you are thinking about a home warranty like you see on TV for appliances and HVAC systems, in my opinion, no. Your new home will likely come with manufacturers warranties on all of the major appliances and systems. If you are talking about a builder’s warranty, I would advise working with a builder who offers one. If a builder is willing to stand by general workmanship and materials, it’s a good indication that they take pride in their work.

Local or Regional contractors?

In my local experience, subcontractors can be extraordinary difficult to line up, and shift around it another contractor gets delayed. If your general contractor does not have an existing relationship with the local subcontractors you will likely have to use, you could face major delays when it comes to the completion of each step in the process. Further, if that contractor has several jobs out of the area, you will find that they will likely take care of their local client base first. My best advice would be to at least find a contractor that has a pre-existing relationship with the local subcontractors.

Any other advice?

1) Be involved with your construction project, but not over involved when it comes to moving things around or changing finishes. Many people have a hard time visualizing what they want until they see it, at which point they begin to make changes. This is where higher than expected costs can come back to bite you. Your contractor should have a good idea of what you were looking for, and they are skilled in visualizing in anticipation of the end result.

2) Know that your project likely won’t be completed on time. I hate to bring it up out of the gate, but we have such a limited number of available contractors, and the Teton region is relatively secluded when it comes to available materials. Set high expectations, but prepare for this in the back of your mind.

3) I have a vast number of construction related articles available at tetonrealtyblog.com as well. If you have questions about HVAC systems, insulation, or other construction-related items, you might try searching them in the search bar on the site. Also, the Idaho Office of the Attorney General has put together a very nice 12-page brochure on what to expect in terms of residential construction in Idaho with a few tips when it comes to choosing, and working with your contractor. That link is below.

http://www.ag.idaho.gov/publications/consumer/ResidentialConstruction.pdf

Settlement statement breakdown, what is a flood certification?

December 15, 2016 By Tayson Rockefeller Leave a Comment

If you have ever obtained a loan on a property, and reviewed your settlement statement break down prior to closing, you’ve probably noticed a breakdown of fees associated with your loan. We don’t normally see some these things when it comes to cash transactions. One of those fees required by most lenders is the flood certification fee. It can sometimes be overlooked, typically the cost is less than $100. So what is it?

Basically, it’s a real estate-related document that outlines the flood zone status of the property. If the lender determines the property is in a flood zone, They will require an additional flood insurance policy (in most cases). The status of the property is subject to re-evaluation. If it is later determined that the flood maps changed, the lender can usually come back at any time and require the additional insurance.

So, if you are obtaining a loan, in most cases you can rest assured that someone will help you with this process. But what if you are paying cash?

There are a number of resources available to help research flood zones. The first place to start, in my opinion, would be the FEMA flood maps service center. There is Interactive map with address search capability to help pinpoint the property in relation to the latest FEMA map that is available. These maps can be amended overtime as topography changes either naturally or as a result of excavation or man-made structures.

Second, most counties have an available map layer that provides some of the same information, or similar information. This can also be a starting point when researching properties in or close to a flood zone.

Third, the US Fish and Wildlife service has a wetland map that was compiled over the past three decades using old infrared satellite technology, and other technologies as they came available. These maps are mostly related to Wetland habitat, though they do depict Wetland areas, and should be considered for development projects, but can also be a good resource for someone doing their own homework.

Finally, what if you want to skip the hard part and simply pay for a flood certification through a third party such as what a lender might do on your behalf? Not a bad idea. Online resources such as CoreLogic offer these services at a minimal cost.

Tayson is happy to provide sources for this information upon request.

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