30 Must-Know Real Estate Terms for Buyers
Do you ever feel like you need to consult a dictionary just to understand the real estate market? If so, don’t worry, you’re not alone!
The jargon used in real estate can be overwhelming, and terms like Rera, Principal, and Rent-to-Own can be especially confusing.
To help you make sense of it all, we’ve compiled a list of 30 real estate terms that will decode the language of the market. So, lets jump in without any delay!
Here are some of the key real estate terms that you might want to familiarize yourself with:
- RERA (Real Estate Regulatory Authority):
The Real Estate Regulatory Authority (RERA) is a regulatory body established by the government to regulate the real estate sector. Its primary objective is to safeguard the interests of homebuyers and promote transparency, accountability, and efficiency in the real estate market.
- Built-Up Area:
The built-up area is the total area covered by a property’s structure, including all enclosed spaces like rooms, hallways, and walls. It does not include areas like stairwells or balconies.
- Agreement of Sale:
An agreement of sale, also known as a purchase agreement or sales contract, is a legally binding document that outlines the terms and conditions of the property sale, including the purchase price, payment terms, and any contingencies. It serves as the basis for the final sale transaction.
- Encumbrance Certificate:
An encumbrance certificate is a legal document that verifies whether a property is free from any legal or financial liabilities, such as mortgages, liens, or easements. It provides assurance to the buyer that the property’s title is clear.
- Freehold Property:
A freehold property is one where the buyer owns both the property and the land it sits on indefinitely, with no time limit on ownership. It contrasts with leasehold property, where the buyer only owns the property for a specified period.
- Carpet Area:
The carpet area is the actual usable area within a property, excluding the thickness of walls and other structural elements. It is the area where one can lay a carpet, hence the name.
- Sale Deed:
A sale deed, also known as a conveyance deed, is a legal document that transfers ownership of a property from the seller to the buyer. It is executed after the completion of the sale transaction and serves as proof of ownership.
- Stamp Duty:
Stamp duty is a tax levied by the government on property transactions, including the sale and transfer of ownership. The amount of stamp duty varies depending on the property’s value and location.
- Power of Attorney (POA):
A power of attorney is a legal document that authorizes one person to act on behalf of another in legal or financial matters, such as signing documents or making decisions related to the sale or purchase of property.
- Mortgage Deed:
A mortgage deed is a legal document that pledges a property as security for a loan. It gives the lender the right to sell the property in the event of default by the borrower.
- Joint Venture (JV):
A Joint Venture is a business arrangement between two or more parties, typically developers, for the purpose of jointly developing a real estate project. Each party contributes resources, expertise, and shares the risks and rewards of the venture.
- Appraisal:
An appraisal is a professional assessment of a property’s value conducted by a certified appraiser. It serves as a crucial factor in determining the property’s market worth.
- Closing Costs:
Closing costs comprise various fees and charges associated with finalizing a real estate transaction. These can include appraisal fees, title insurance, and attorney fees, among others.
- Comparative Market Analysis (CMA):
A CMA is a comprehensive evaluation conducted by real estate professionals to determine a property’s value by comparing it to similar properties recently sold in the area.
- Down Payment:
The down payment is the initial sum paid upfront by the buyer towards the purchase price of the property. It is typically expressed as a percentage of the total purchase price.
- Equity:
Equity represents the portion of the property owned outright by the homeowner, calculated as the property’s market value minus any outstanding mortgage debt.
- Principal:
In the context of a mortgage loan (also referred to as a Home Loan), principal refers to the original amount of money borrowed before interest and other charges are added.
- Rent-to-Own:
Rent-to-own is an agreement allowing tenants to rent a property for a specific period with an option to purchase it later. A portion of the rent paid during the rental period may be credited towards the purchase price.
- Closing Date:
The closing date is the day when a real estate transaction is finalized, and ownership of the property is transferred from the seller to the buyer.
- Contingent Sale:
A contingent sale is a type of real estate transaction where the sale of a property is dependent upon the successful sale of the buyer’s current home.
- Easement:
An easement is a legal right that allows someone to use another person’s land for a specific purpose, like accessing a public road or utility lines.
- HOA Reserve Fund:
An HOA reserve fund is a portion of the homeowners association fees set aside for future maintenance and repair expenses of common areas within a community.
- Offer Letter:
An offer letter is a document that a buyer submits to the seller outlining the proposed terms and conditions of the purchase, including the purchase price, contingencies, and proposed closing date.
- Lease Agreement:
A lease agreement is a legally binding contract that defines the terms and conditions of renting a property between a landlord and a tenant. It outlines key aspects such as the rental amount, lease duration, payment terms, and the responsibilities of both parties.
- Pocket Listing:
A pocket listing is a type of property listing that is not publicly advertised or listed on the Multiple Listing Service (MLS).
Instead, it is marketed privately by the listing agent to a select group of potential buyers. This approach is often used for high-end properties or for sellers who prefer a more discreet sales process.
- Termite Inspection:
A termite inspection is a comprehensive examination of a property to identify any signs of termite infestation or damage. It is often required by lenders as part of the home inspection process. A professional inspector conducts a thorough assessment of the property to determine if there is a termite problem and if so, to what extent.
- Zoning Laws:
Zoning laws are local government regulations that dictate how land and properties can be used within specific geographic areas. These laws can affect property values, development plans, and neighbourhood characteristics. They are designed to ensure that properties are used in a way that is compatible with the surrounding environment and to promote public health and safety.
- Rent Control:
Rent control is a government policy that limits the amount landlords can increase rent on residential properties. It is aimed at protecting tenants from excessive rent hikes and ensuring affordable housing options. Rent control laws vary by jurisdiction and can have a significant impact on the real estate market.
- Counteroffer:
A counteroffer is a response to an initial offer made by one party in a real estate transaction, proposing different terms or conditions. It initiates a negotiation process between the buyer and seller until both parties reach a mutually acceptable agreement. Counteroffers are common in real estate transactions and are used to ensure that both parties are satisfied with the final terms of the deal.
- Title Company:
A title company is a firm that specializes in researching and insuring title to real estate properties. They play a crucial role in ensuring that the title is clear and transferable, facilitating smooth transactions. Title companies conduct a title search to verify ownership of the property and identify any liens or encumbrances that may affect the sale.
- Property Tax:
Property tax is a tax levied by local governments based on the assessed value of real estate properties. The revenue generated from property taxes is used to fund public services and infrastructure projects within the community. Property tax rates vary depending on the location and value of the property and can have a significant impact on a homeowner’s overall expenses.
- Happy House Hunting
Having a good grasp of the key terms in the real estate industry is crucial for any potential homebuyer.
With this knowledge in hand, you will be well-equipped to examine the complexities of the market, understand purchase agreements and closing documents, negotiate effectively, and ultimately find your dream home.
At Save Max, we prioritize accuracy and reliability in every piece of information we share, making us a trusted source for all your real estate needs. To connect with our team of experts or for any inquiries, please feel free to reach out to us. Start making informed real estate decisions today with Save Max Real Estate Brokerage.
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