The proliferation of thousands of property developers offering excellent apartment complexes in all major cities and towns and the plethora of home loans provided by banks and other financial institutions had made home buying easy, interesting and attractive. Many property developers extend significant discounts or special prices to beat the severe competition existing in the property development industry and the sluggishness in housing demand due to tough economic situation.
Still, purchasing your own home requires understanding the various technical terms used in the real estate market to make the most of your house purchase and maximise the benefits that can be reaped while negotiating for the purchase of the pre-constructed house or apartment or building your own dream house. We present below the major technical terms of the real estate market that you should become familiar with in order to have an edge over other buyers in the market and not to be outwitted by the property developers, sellers or construction contractors. The technical terms are listed in alphabetical order for easy reference.
Agreement of Sale
Agreement of Sale is a written contract or agreement between the seller and the buyer. Through this contract, both parties agree for a ‘meeting of thoughts or minds’. The seller agrees to sell the specified property under stipulated terms and conditions set forth in the agreement of sale and the buyer agrees to purchase the property, accepting all the terms and conditions.
Amenities signify the conditions conducive to enjoyable living by living in a particular home or apartment. Amenities are never measured by monetary calculations but they are the intangible and tangible benefits or assets, such as nearby parks, bus stands, schools, temples, shopping malls, etc.
Amortisation is the gradual elimination of the home loan or mortgage liability through periodic payments, covering the principal, as well as the interest amounts, over the agreed specific period of time.
Annual Percentage Rate
Annual percentage rate indicates either the annual interest rate applicable to a home loan or the total cost of the home loan, expressed in terms of a yearly rate calculated on the loan balance amount.
Annuity is the amount received at fixed and regular intervals in equal or near equal payments. Annuity is the value of the instalments paid over a period or the instalments due to the lender over a period. Annuity can also mean the rent payments made to the landlord under lease agreement.
1) A carefully documented and ‘defensible’ opinion of value by a licensed and qualified professional appraiser, derived on the basis of recent sales of properties comparable to the property in consideration.
2) An estimation or statement of the value of a property on a specific date, conducted by a qualified and unbiased person.
The appraiser submits the appraisal report and charges an appraisal fee.
Area is a general term used to denote the value of the measurement of the land in two-dimensional surface measurement process. Other types of areas like floor space index (FSI), carpet area or built-up area, super built-up area, etc. are discussed separately.
Arms Length Transaction
Arms length transaction signifies the sale of a property or asset, in which all the parties involved in the transaction act without any outside pressure or influence from third parties and in their individual best interests.
1) The official valuation of the property for purposes of public improvements or ad valorem taxation.
2) The tax imposed by civic or government authorities to execute public improvements like paving sidewalks, curbs, alleys, streets, etc. for the benefit of a specified area.
Such assessed value is paid by the house owners over a specified number of years to the civic or government authorities, on a monthly, quarterly, half-yearly or annual basis.
Attachment is the seizure of the personal property of an individual through a lawsuit of a court to acquire jurisdiction over the specified property for compelling the individual to appear in the court or for forcing the individual to furnish adequate security against debts or costs that arise out of litigations.
Attestation is the official concurrence of the witnessing party on the correctness of the document or paper. The name of the witnessing party, along with the signature and/or seal, is affixed on the document or paper as testimony of the above fact.
Auction is the fixed, time-defined and firm sale of the property by inviting competitive bids or offers of purchase.
Balloon payment is the instalment payment on any promissory note or loan but usually the large final instalment payment, significantly higher than the regular instalment payments, for the purpose of complete discharging of the debt.
Balustrade is the supporting column of the stairway handrail.
Bankruptcy is the indication of the inability of the debtor to pay financial debts. The debtor seeks and obtains relief from a special court order, allowing for the resolution or the elimination of the debts of the debtor in an orderly fashion.
Betterment is any improvement to the property that enhances the property value, which can be considered as capital asset. Betterment is different from replacements or repairs, in which the original costs or characters of the property units remain unchanged.
Bill of Sale
Bill of sale is the written instrument, evidencing the transfer of the title of the property from the seller to the buyer.
Blanket Trust Deed or Mortgage
Blanket trust deed or mortgage is a loan or mortgage that covers more than one property and entire layouts. In this transaction, all the properties are pledged as security for the loan amount or the debt. In such a situation, the borrower can obtain partial reconveyance, when a piece or parcel of the layout is sold.
The above list of real estate terms is the first part of our effort to educate our readers, so that potential property buyers clearly understand the technical terms used in sale and purchase of properties and housing units to avoid unnecessary problems later on. Keep watching for subsequent parts of real estate technical terms.