There are several real estate terms that are thrown around during formal and informal discussions around buying a home.
While it is important to understand the exact technical and legal definition of each of these terms when they are part of a legal contract, it helps to have a quick ready reference for what these terms mean in their true essence.
Read on for a quick reference before you head for your next real estate buying discussion.
• Assessed Valuation
This is the value the government places on the property for the purpose of levying a tax on it. Simply put, it determines the value of the property for tax purposes. When buying a premium residence, this can make for a substantial component of your total costs and must be factored for in advance.
• Farm Property
This term is used to define all properties that are within the boundaries of agricultural land. As per the law, such properties can be used for various purposes, including accommodation, storage and more. When purchasing non-urban residences, it is important to know whether the property is built on agricultural or non-agricultural land, followed by a series of related queries.
• Fair Market Value
Negotiations play a huge role when it comes to property purchases. As a buyer, one needs to strike a deal not just by bargaining, but by understanding the Fair Market Value involved. The term refers to the highest price a buyer is willing to pay and the lowest a seller is willing to accept.
• Closing Costs
These are expenses incurred by both, the buyer and seller while completing a deal. Also known as ‘settlement costs’, these normally include stamp duties, registrations costs, site visit costs, etc.
Process & Permission-related Terms
• Due Diligence
This involves establishing whether a property is safe from a legal standpoint for purchase. Since a lot of premium residential property developers promise a variety of lifestyle offerings, it is important to check on clearances around the same, apart from clearances around regular elements.
• No Objection/ Commencement Certificate
This could be one of the elements to consider as part of the due diligence with regards to a potential property purchase. This certificate is issued by the local authorities basis the plan submitted by a developer. It is mandatory to have this in order to begin construction. Hence, ensuring this certificate is in place offers an assurance about approval of the plan that’s presented to you.
• Encumbrance Certificate
This certificate is proof that the property is free of financial and legal liabilities. It is evidence that the property can be purchased without any outstanding liabilities or other unpleasant surprises.
• Title Search
This is a search of public records to trace the history of the property and to find out if there are any discrepancies, holds, or other problems. This can also be part of the due diligence process when you are closer to making a final decision.
• Occupancy Certificate
This is issued by a public authority and states that all the work has been completed as per the plans and the property is deemed fit to be habitable. This should be considered during the due diligence if you are looking to purchase a residence that’s ready for occupation.
This is a reproduction of a technical drawing of the construction that will be developed. This document gives buyers a detailed idea of what the property will look like post completion. Make sure you access the blueprint’s finer details not just with regards to the private residence spaces, but also the overall landscape to avoid any unpleasant surprises later.
This term refers to residences that can be customized by the developer as per the buyer’s individual preferences but to the extent that the original infrastructural plan is left untouched. Knowing if a property is available for semi-custom requests can help save a lot of time and money that would have to be otherwise invested later for customizing it as per personal preferences.
This refers to residences that are built by the developer as per the buyer’s individual preferences even if it involves altering the original floor plan. When you have zeroed down on a property but are hesitant to make a final decision owing to its blueprint layout, ask the developer if customizations are available. This will ensure you have the best of both worlds as per your preferences.