Determining the “value” of a piece of real estate (the land and all the “permanent” structures and fixtures) can be a tricky process. Having been a licensed real estate appraiser for two decades, I can certainly attest to that. We recently published an article that went into the basics of property valuation, here we will talk about a few more specific details.
What Is Real Property?
At its core, real property is all about the land. In the vast majority of the country, your “property” starts with the land ownership and then the improvements are added into the mix.
When we talk about the improvements, we are talking about the “permanent” fixtures on the land. I use the quotation marks around permanent is because it has a different definition to real estate professionals than what you might find in your Webster’s Dictionary. Obviously, with a wrecking ball and a bulldozer (or maybe some well-placed TNT), nothing man constructs is permanent. We’ve all seen videos of skyscrapers or sports stadiums reduced to rubble in a matter of seconds. So the jargon is a little different.
What Are The “Improvements?”
As I noted above, the property starts with the land. Then, unless you plan to farm the land or live in a tent, you put things on the land. Generally speaking, a good starting place is a residence. An abode. A place to hang your hat.
After the building you are going to live in is decided, some outbuildings may be in order. The accoutrements, so to speak. What you build and how you build it depends in large part on local zoning regulations.
Utility buildings, or outbuildings, come in all shapes, sizes, function and construction materials. Maybe you want a wood frame building (think of a barn raising) or something more along the lines of a steel building.
Whichever type of building you decide to build, my number one rule is start with professional advice! Fortunately, with the advent of the Internet, there are many websites you can visit to see what’s what before contacting a sales rep. One site I found belongs to the folks at Armstrong Steel. Here you can get a handle on the different styles of steel buildings, their possible uses and construction costs involved.
What Can I Build?
There is no single answer to that question. The answer is as varied as the need, cost, and available land. Here are just a few ideas of what kind of things you can build:
~ If you love horses, you can construct a stable for them. If equestrian sports is your thing, some people have built indoor training rings.
~ For those who love to build things with their hands (in contemporary culture, a “maker”), a machine shop or design studio might be what you and your elves need. Imagine all the beautiful table saws, the lathes, the drill, or maybe a giant loom to weave to your heart’s content.
~ Do you love to entertain? Then what you may need is a pool house (pool sold separately) or a game house. Hours upon hours spent with family and friends!
~ Perhaps your mother-in-law needs a new place close by. Some people will add an extension to the existing home while others put up a second house on the property, local zoning plays a huge role in that decision. The so-called mother-in-law apartment is likely to add value to a property. The issue of whether your mother-in-law herself adds value I will leave to your discretion.
Price Vs. Value
“Price” is the end point of the process of marketing and selling a property, often with the help of a realtor (remember my professional rule?). However, the “value” of a property, in monetary terms, is going to fall within a range of price points. Part of selling a property is the contract negotiations that will determine the final sales price. But, because of the intangibles that are a part of any “meeting of the minds,” the prices of two nearly identical properties sitting side by side will likely be different.