Table of Contents
Whether a first-time buyer or seller, you will encounter some terminologies in the real estate sector that might confuse you. If you do not know these real estate terminologies - you will end up making a wrong investment and might regret later. Therefore, we have prepared a list of real estate terminologies that will help you make an informed choice and crack the best deal of your life.
In our today’s blog we have created a list of these commonly used real estate terms in India, that too alphabetically, to help you gain some knowledge while you enjoy a good read. So, without further delay, let's get familiar with some of the terminologies in real estate.
A to D
A
- Adjustable-rate mortgage
Mortgages have become common for all homebuyers, allowing people to purchase their dream homes without waiting for years. So when you browse for a mortgage concept, there is a high possibility that you will come across one of the common real estate terms - the adjustable-rate mortgage. It refers to the type of loan where the interest rate on an ARM changes periodically. Therefore, depending on the market, you might get lower or more excellent interest rates from the starting one.
- Appraisal
An appraisal is one of the standard terms used in real estate, and it is required to determine the property's estimated value. When selling a property, the mortgage lender sends an appraiser to seek a professional opinion on the land’s value. Because of this, the lender gets clarity on whether the property is worth the amount of the loan the buyer is seeking.
- Appraisal Contingency
If the appraised worth of a home is less than the sale price, this clause gives the buyer the option to cancel the purchase agreement.
- Appreciation
Appreciation is the amount by which a home's value increases over time.
- Assessed Value
Assessed value, the most common terminology in real estate, is used to determine how much tax the property owner will have to pay.
B
- Broker
It is one of the most common terminologies in real estate. A broker is a real estate professional licensed to represent clients and manage brokerage in their state.
- Bridge Loan
This real estate key term is used by the majority of people. It refers to a short-term loan a homeowner takes against their property to buy another.
- Blind Offer
A blind offer is made despite the buyer having a clear possibility of visiting the property but choosing not to do so and making a random offer. A blind offer is the offer made by the buyer without even visiting the property. In this situation, the buyer can visit the property and chooses not to and nor sends any trusted person.
C
- Closing
Closing is the final step involved in the real estate transaction process. This process transfers the property from the seller to the buyer.
- Capitalisation Rate
You would have surely heard of the capitalisation rate or cap rate that is a metric used to determine the potential return on an investment property.
D
- Deed
Deed as a real estate term refers to the legal document transferring a title from the seller to the buyer.
- Downpayment
A downpayment is a cost that the property buyer pays at the time of closing.
- Debt-to-income ratio
The DTI ratio helps in determining the total debt expenses. With the help of a debt-to-income ratio, a lender gets an idea of your affordability based on their available loan and can estimate how much you can afford to pay monthly.
E to K
E
- Encroachment
Encroachment occurs when a property owner infringes on a neighbour's rights by constructing a structure that crosses the neighbour's property line.
- Equity
Equity is calculated by measuring the difference between the amount owed to the lender and the property's value.
- Exclusive Listing
When a seller agrees to collaborate on selling a property with one particular broker, that is known as an "exclusive listing."
- Earnest Money
Earnest money is a cash deposit made by a prospective homeowner during the contract period to show they are committed to purchasing the property. It is typically paid as a demonstration of good faith.
F
- Fair market value
An accurate appraisal in an open market provides buyers and sellers with information about the asset, allows them to act in their best interests, and does not place them under unreasonable time constraints to complete the transaction.
- Fixed-rate mortgage
A fixed-rate mortgage has the same interest rate for the loan term.
- Foreclosure
Property goes into foreclosure when the owner misses mortgage payments, and the lender tries to recover the balance.
H
- Home Inspection
A home inspection is done before the closing process, and it is done to evaluate the property's condition, like its electrical, sewage, and plumbing.
- Home Insurance
Home insurance is a protection that helps cover costs related to repairs of a property.
L to Q
L
- Lender
A financial institution or a person that lends funds to another person to buy property is known as a lender.
M
- Mortgage
A loan is used to buy a home or other real estate.
P
- Pre-approval
It is a process that involves a lender or a bank reviewing one's finances and monitoring income, assets, and credit history to understand how much money can be borrowed.
R to Z
R
- Realtor
A person licensed to negotiate and coordinate the buying or selling of real estate is known as a Realtor.
T
- Title
It refers to the rights to property.
- Transfer of ownership
It means transferring the property's deed and title from the seller to the buyer at closing time.
- Transaction Tax
It is a fee charged at the time of the transfer of a property's title.
U
- Under Contract
When a buyer and a seller reach an agreement on a property, it is known as being "under contract."
We sincerely hope that these terminologies in real estate will assist you in easing your real estate transactions. With a knowledge of basic real estate terms and their meaning, it will be simpler than ever for you to get a deal and get your ideal property.