It is no exaggeration to say the real estate it one of the most deep and complex markets in history. Think about it: The legislative system of the United States is heavily based on that of the Roman Empire. But the systems for owning land? Unlike anything that has existed before.
Part of this is due to the naturally inhuman tendencies built into bureaucracy. You see, bureaucracy does not care if a contract makes sense to humans. As long as every individual component of a contract makes sense, then the longer it is the better.
Magnify this tendency to the already-complex notion of land ownership, and suddenly you have clause after clause, liability after liability causing buying a house to require what is basically a legal degree just to understand what rights you are signing into and out of with real estate.
So, real estate is complex due to the bureaucracy. But people learn how to operate in complex fields all the time. How can one build their knowledge? And what benefits are there to that?
How to Explore Liability
If you want to understand how the real estate industry works, the best place to start is by understanding liability. You will hear the word “liability” thrown around more than a ball on a baseball diamond. But just what does it mean? Well, it basically means “whose fault it is”.
For instance, let’s say you crash your car into a wall. The car was moving, the wall was not. You are at fault—or “liable” for damage to the wall. The reason you are at fault is because the law has decided that you should be expected to navigate around inanimate obstacles.
Now, if you get into a car and crash into another car, that is more complex. There has to be an investigation to ascertain whether or not you could have reasonably been expected to avoid the crash. Sometimes, you are not at fault simply because no driving skill can avoid some problems.
Let’s Consider This in the Context of a Home
Imagine this line of thinking with a home instead of a car. Rather than driving into a wall, you do something else neglectful that results in damage to a house. For example, you do not clean up mold. You do not repair water damage. You do not address a rat problem.
These make you liable. If someone gets sick because of the mold, falls through a water-damaged floor, or gets scratched by a wild rat, then you might be at fault for not fixing those problems before you sold the house. But it gets even more complicated than that.
You see, most houses will be appraised for their value before they are sold. In fact, they will be appraised for their value long before they are sold. Most people refurbish a house before it goes onto the market to make sure that they can sell it for as much money as possible.
This appraisal will produce a document with all of the house’s liabilities. If you have this document at the time you sell the house, and the buyer signs that they read it, then liability is transferred away from you. They know what they are risking by buying it.
And if they know, then they are willingly taking on that risk by choosing to buy it anyways.
How to Research the Marketplace
Liability applies to all real estate basically equally. Some businesses will not care about certain damages as much as others, but there is just as much risk of damage to an occupant’s body in either case. The marketplace, however, is an even bigger and more complex beast.
The marketplace is the general industry of buying and selling real estate. It has its own trends, as well as its dos and don’ts. Like liability, it is far too complex for a person to understand every part of it. But you can specialize in the parts of it you are looking to make money in.
The Different Parts of the Market
Let’s say you have a house you want to sell. There are a few different things you can do with that house. On the one hand, you can sell it as-is. This is low effort but can be a good reward.
The market will likely have higher standards than that, however. Even if the house has damage for which the buyer can sue you for (you guessed it) liability of damages, they usually do not want to go through that whole song and dance. What they want is a good product.
But the exact details of what makes a product “good” changes from client to client. Some clients want a house. Others want a vacant lot they build on top of. Others still want a house that has not been refurbished so they can refurbish it themselves, usually to resell it for more money.
Understanding the market means finding these difference niches. These are all different ways of using real estate. Understanding them is the key to finding the best way to sell your house.
Understanding What You can do with Real Estate
Which ultimately leads us to our final point: No matter what else you learn in your endeavors to build your knowledge about real estate, at the very least learn what real estate is used for.
Homes are the common answer. But are homes in your area bought, or rented? Are they family homes, or duplexes? Condos or apartment buildings? All of these are living spaces, not retail spaces, but they all have their own ways of being constructed and managed.
Learn how these work and you will learn how to handle the real estate market.
Like we said at the outset, real estate can be complicated. But that is part of what makes it so profitable. You can delve deep into very specific details of how real estate works and find ways to maximize value that no one else is capitalizing on.
If you want to learn more, visit us at https://www.teifkerealestate.com/the-real-estate-podcast/