Real Estate Terminology First Time Home Buyers Need To Know

First time home buyers already have a lot on their minds when it comes to the technicalities of the real estate industry. Why should you also be confused about the terminology your real estate agent is using?

This exhaustive list of real estate jargon will help navigate your first home purchase with ease. To find a word simply press ctrl+f and type in your word. It’s that simple!

Also Read: Real Estate Terminology

1. Absolute Title

An Absolute Title is an undisputed right to the ownership of property. This signifies that the owner of the property, named in the Absolute Title, cannot be challenged by anyone to their right of ownership. It also means that the buyer of the property will also receive an absolute title in case the seller held one.

2. As-Is Where-Is Basis

When foreclosed properties are sold by a bank or a lending institution, they are mostly sold on an as-is-where-is basis. This means that the buyer inherits any legal or financial burdens that come with the property. Thus, becoming liable to any liens, legal disputes, or due payments that are on the property. This releases the bank of any responsibility related to the property.

3. Asking Price

The asking price is the price of the property set by the seller. This is not the final price of the property in case the seller is willing to negotiate.

4. Bayana 

Bayana is the Indian term for token money. This is a sum of money paid to the property owner to stop any further negotiations regarding the sale of the property with any parties other than the one paying the bayana.

5. Built-Up Area

Built-up area is the complete area that your property covers. This includes any maintenance or utility ducts within the property, outside walls of the property, the complete carpet area of the unit and the walls of the property.

6. Buyer’s Market

A Buyer’s market is a market condition where the buyers have more control over the property prices. This happens when the repository of property available for sale is high and the buyers looking for property in the market are low. This allows buyer’s their pick of the lot while paying lower prices than they normally would have to. This is the best time to invest in property.

7. Capital Gain/Loss

Capital gains or losses are the change in the value of a property that happens over time. These changes in the value of a property can be long-term or short term and are taxable income. Long-term capital gains are taxable at a lower rate than short-term capital gains. This promotes investment in the economy.

8. Carpet Area

As the name suggests, the carpet area is any area within a property that can be carpeted. This means an area of the property minus the wall thickness and any utility shafts. It is also defined as the livable area of a property.

9. Circle Rate

This is the minimum value of a property used while registering it with the regulatory authorities.

10. Closing Costs

Closing costs refer to any costs incurred by either the seller or the buyer outside the agreed-upon rate of the property. It can include stamp duty, other registration costs, loan processing fees, credit report charges, title searches etc. which are also commonly known as settlement costs.

Also Read: Buyers Guide

11. Completion Certificate/ Statement

A completion certificate is issued by the regulatory authority to signify that a property is ready for occupation. This certificate claims that the property has been inspected and any necessary work to make the property occupiable have been completed. This certificate is a must for owners to claim tax benefits on their property.

12. Conveyance

Conveyance is the written document that legalises the transfer of ownership from one individual to the other. It can refer to title changes and lease agreements.

13. Cooperative Housing

A cooperative housing society is a system by which a group of people purchase land from the local development authorities on a first come first serve basis. This type of housing society is promoted by many state governments in India. Once land is allotted to the group, they jointly hire a construction company and design and plan a residential project on the allotted area.

Allotment of flats is done based on a draw system amongst the society members.

14. Credit History

Credit history is your past record of secured and unsecured credit. It includes the amount of credit available to you, the amount you used, and your payment habits. This is necessary for your credit score. Depending on your credit history, you might get a high or low credit score which determines the amount of loan and the rate of interest that you’ll be offered by banks.

15. De Facto Possession

This refers to the physical possession of a property by moving into it.

16. De Jure Possession

De Jure Possession is also known as the legal possession of a property and does not need to be followed by physical possession of the property.

17. Demand Letter

It’s a letter sent by one party to another to request due payment. It can be sent by either a seller to a buyer or a lender to the borrower.

18. Down Payment

Down payment is the lump sum amount that a property buyer is required to pay when purchasing a property. This is the amount that the buyer cannot take out a loan on and needs to be paid in full. In India, a buyer needs to pay a minimum of 20% of the price of the property as a down payment at the time of purchase.

Also Read: Check Value Of Your Property

19. Encroachment

Encroachment is the act of constructing over the boundaries of your property lines. When a landowner illegally constructs over their neighbours’ or public land next to their property, it is called encroachment. This act is punishable and the wrongdoer can be imprisoned and/or fined.

20. Encumbrance

Encumbrance refers to any claims over a property made by a third party that is not the owner. It can occur due to loans or property taxes due on the property or easements. This can restrict the use of a property for any means including a sale.

21. Encumbrance Certificate

The Registrar of Assurances issues an Encumbrance Certificate to a property that is free of any encumbrances. This allows the free use of the property by the owner.

22. Fixed Interest Rate

A fixed interest rate is when the rate on your home loan does not change with market fluctuations. It is fixed for either a long period of time or for the entirety of the loan tenure.

23. Fixed-O-Floaty Interest Rate

Fixed-o-floaty interest rates are fixed interest rates for a fixed period of time. Post that, they are changed into floating interest rates.

24. Floating Interest Rate

Floating Interest rates, also known as variable rates,  are interest rates on your home loan that get affected by the market fluctuations. 

25. Foreclosure

Foreclosure is the act of a bank by which they seize a property for which the owner is unable to make loan or mortgage payments. The banks then sell the property to a different buyer to recover the remaining loan or mortgage amount. This is a predetermined clause present in the loan agreement and agreed upon by the borrower.

26. Freehold Property

Freehold property is a kind of property ownership title that allows the owner unrestricted access and control over the property. This means the owner can, without restriction and seeking permission from regulatory authorities, make modifications to and sell the concerned property.

27. Hard Costs

Hard Costs are the costs directly related to the construction of a property. It can include costs of labour, construction materials, machinery and equipment. 

28. Home Loan Insurance

Home loan insurance is an insurance plan that provides reduced cover to the insured. This means that as the policyholder pays off their home loan, the insurance covers only the remaining amount of the outstanding home loan. In the event of the passing of the insured, the home loan insurance organization pays off the remainder of the home loan directly to the lending agency.

29. Housing Scheme (Awaas Yojna)

A very popular housing scheme in various states in India, Awaas Yojna is the allotment of housing on the basis of a public draw. Everyone who does not own a house in the city is allowed to submit an application to be a part of the draw along with a fee. The houses offered under this scheme are highly subsidised and are meant to provide housing to as many families in the city as possible.

30. Joint Ownership

Any property under the name of more than one owner is said to be a joint ownership property.

31. Lock-In Period

Builder property once bought usually cannot be sold for a pre-decided period of time. This is called the Lock-In Period. This lock-in period differs from builder to builder and is revealed before the sale of a property is made.

32. Mother Deed/Title

The Mother Deed or the Mother Title is the document that tracks the origins and all other conveyance titles related to the property. It is one of the most important documents that a buyer must receive to make the ownership of the property indisputable.

33. Mutation 

Mutation is not a legal transfer of property. It is simply done to understand who is liable for the payment of the property tax on the property mutation is done for. Hence, Mutation is the process of transferring liability to pay any fee or taxes on the property from one person to the other.

34. No Objection Certificate (NOC)

The No Objection Certificate is a legal document issued by the regulatory authorities of an area to signify that the construction is as per rules and the plans for the construction have been approved.

35. Occupancy Certificate

The Occupancy Certificate is issued for a property that has been completed as per the approved plans and requires no more work or construction to make the property livable. The Occupancy Certificate is a must for the owner to rent out, lease, or live in the property.

36. Open Listing

A property is said to be in an open listing when multiple agents work on it to sell the property. In such a case, the agent that makes the final sale gets the commission.

37. Pre Approval

This is a case in which the borrower or the lending agency runs a financial background check on the prospective borrower and sanction a loan before the borrower has decided on a property. This pre-approval is done on the basis of the credit reports, salary, and other financial behaviours of the borrower.

38. Pre-Launch Property

Pre-launch property, as the name suggests is a property that is still in the planning stages and does not have all or any of the required approvals yet. This kind of property is offered at a much lower price by the builder to raise funding. Buyers are kept in the loop of the risks of investing in a pre-launch property but the returns on such a property are generally high.

39. Pre Payment

Prepayment is the act of paying off an outstanding payment of a loan before the due date. 

40. Pre-Payment Penalty

A pre-payment penalty is a penalty for paying off a loan earlier. This is to compensate the lender for the loss of future interest payments. The pre-payment penalty is pre-determined at the time of borrowing and is generally set as a percentage of the amount pre-paid.

41. Primary Market

A primary market is simply a market that only lists new properties directly from the source, i.e the builder in most cases.

42. Rate Lock

If the borrower and the bank or the lending institution agree on a fixed rate of interest on the loan for a specific period of time, it is known as a rate lock. Since the lender forgoes possibly higher floating rates of interest during the time of a rate lock, the rate of interest for a rate lock is set higher than the floating rate of interest.

43. Rateable Value

The rateable value of a property is set by the Income Tax authority. This is the value of the property that is used to calculate the property tax that the owner must pay on the property.

44. Redraw Facility

The redraw facility is given to a borrower by the lending institution. According to this, the borrower can repay the loan ahead of the due date and these prepayments can then be withdrawn again by the borrower if needed. 

45. Refinance

When a borrower takes out another loan on the same property to pay off their previous loan, it’s known as refinancing.

46. Requisitions On Title

It’s the process that the buyer needs to follow to acquire information about the property from the seller.

47. Reverse Mortgage

The reverse mortgage system is a system of mortgages for senior citizens where they can convert the equity in their home into cash to mimic an income. Under this model of mortgage, the repayment of the loan is only made in case the borrower passes or the home is sold.

48. Right Of First Refusal

This is the agreement between the owner of a property and another party that allows said party to rent, lease or buy the property before it is offered to the market.

49. Secondary Market

The secondary market is a market made up of resale listings. This means properties that have already had an owner, which is not the builder of the property. It's generally a market for investors.

50. Seller’s Market 

A seller’s market is the perfect time for a seller to put their property listing on the market to reap maximum returns. This market condition happens when the number of buyers in the market far exceeds the number of properties available for sale. This allows sellers to raise the price of the property.

51. Soft Cost

Unlike hard costs, soft costs are classified as costs that are not directly related to the construction of a property. This could include the cost of planning, designing, legal fees, or any other costs that do not increase the percentage of completion of the property.

52. Soft Launch

A soft launch is the stage right after the pre-launch. Once a property gets all the necessary approvals to begin construction, the builder makes it available for purchase at a slightly higher price than the pre-launch. This price is still lower than the price of the property post-completion. 

53. Stamp Duty

Stamp Duty is a form of tax payable under Section 3 of the Indian Stamp Act 1899. When you buy property, receiving possession is a major aspect of the transaction. However, to also be a legally recognized transfer of ownership, the property then needs to be registered. 

During this registration, your property registration documents are stamped by the regulatory authority. This Stamp makes the document admissible in court as evidence for any future use. Any document not stamped and fully paid (stamp duty) for does not have evidentiary value.

Stamp duty is normally borne by the buyer of the property. It is also to be paid in full when due. The penalty for late stamp duty is 2% per month after the due date and can go up to a maximum penalty of 200%. 

54. Stratified Market

In simple words, a Stratified Market is a market divided on the basis of home value and type. This is due to the socio-economic differences in cities, especially metropolitan cities. For example, house costs in Delhi can range from 10 Lakhs to 3 Crore and over. The buyer base for the 10 Lakh housing and the 3 Crore housing is completely different. A stratified market revolves around studying this concert and determining how each of these divided markets are performing.

55. Super Built-Up Area

The super built-up area of a unit in the area includes the part of common areas proportionally belonging to the unit. This only refers to enclosed areas like lifts and staircases and not open spaces like terraces.

56. Title Insurance

Title insurance protects the insured against any losses that might occur from a dispute against ownership.

57. Title Search

Verifying the seller’s document, or a Title Search is done before signing any property related documents to ensure that the seller has the right to sell said property. 

There are two types of title verification:

Full Search: This type of title search is done in cases of long-term leasing, sale, or resale of a property.

Limited Search: This is done when the leasing period for a property is less than 13 years.

58. Triple Net Lease

A triple net lease is the kind of lease that makes the lessee liable to pay any costs connected to the property on top of the lease rent. These payments include any taxes or maintenance charges.

59. Undisclosed Heir

Anyone who claims the right of ownership over a property, without a will, after in the event of the passing of the legal owner is known as the undisclosed heir.

60. Unencumbered

Any property without encumbrances like taxes, outstanding loans, or easements. 

We hope this list helped you understand any real estate jargon that was thrown at you by your realtor. In case we missed out on the word you were looking for, tell us in the comments below and we will be sure to add it to our glossary.

Happy Home Hunting.