Negative equity and Real estate: Difference between pages

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1. ''Net asset value - individual assets.''
Land and buildings and related rights, especially when being traded or valued.


In relation to individual assets, negative equity is the situation where the value of an asset is less than the amount of a debt relating to it or secured on it.
Also known as real ''property''.




:<span style="color:#4B0082">'''''Example: Negative equity'''''</span>
Real estate is often categorised as one of:
 
#Residential, used for living accommodation;
:A house is worth EUR 400k.
#Industrial, used for manufacturing and similar processes; or
 
#Commercial, used for all other business purposes.
:A borrowing of EUR 300k is secured by a mortgage over the house.
 
:The net worth is the difference between the value of the the house (asset) EUR 400k and the borrowing (liability) EUR 300k
 
:400k - 300k = EUR 100k
 
 
:The Equity in the house is the difference between the current value, and any loans secured over it.
:This is also EUR 100k.
 
 
:If the value of the house falls to EUR 250k, the borrowing now exceeds the value of the asset.
 
:This is 'negative equity' (of EUR 50k = 250k - 300k).
 
 
2. ''Cumulative corporate losses.''
 
A situation where an organisation's total liabilities exceed its total assets.
 
The balance sheet total is negative.
 
This is normally a result of cumulative losses over a number of periods.
 
 
3. ''Individual net worth.''
 
A situation where an individual's total liabilities exceed their total assets.




== See also ==
== See also ==
* [[Assets]]
* [[Bricks and mortar]]
* [[Balance sheet]]
* [[Commercial real estate]]
* [[Equity]]
* [[Corporate real estate]]
* [[High net worth]]
* [[Estate]]
* [[Liabilities]]
* [[Freehold]]
* [[Liabilities and equity]]
* [[Lease]]
* [[Mortgage]]
* [[Property]]
* [[Net assets]]
* [[Real]]
* [[Net worth]]
* [[Real economy]]
* [[Share]]
* [[Real estate investment trust]]
* [[Share capital]]
* [[Real option]]
* [[Shareholders’ funds]]
* [[Tenant]]


[[Category:Accounting,_tax_and_regulation]]
[[Category:The_business_context]]
[[Category:The_business_context]]
[[Category:Corporate_finance]]
[[Category:Corporate_finance]]
[[Category:Investment]]
[[Category:Long_term_funding]]
[[Category:Financial_products_and_markets]]

Revision as of 10:33, 16 July 2022

Land and buildings and related rights, especially when being traded or valued.

Also known as real property.


Real estate is often categorised as one of:

  1. Residential, used for living accommodation;
  2. Industrial, used for manufacturing and similar processes; or
  3. Commercial, used for all other business purposes.


See also

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