• Understanding basic real estate terms can help buyers make the best decisions.
• Carpet area, built-up area, and super built-up area are terms used to calculate a property’s area.
• RERA, sale deeds, and encumbrance certificates are vital aspects of the property’s documentation.
• Down payments and home loans give an insight into the financial side of property purchase.
• Possession dates, approvals, and legal terms are also essential to understand when purchasing property.

Buying a home or investing in property is a significant financial commitment, so it is essential for first-time buyers, real estate investors, and those looking to upgrade their properties to know the necessary real estate terms. Various real estate terms pertain to the property, permits, finance, construction, and closing of a house. Therefore, familiarizing oneself with real estate terminology is critical to asking the right questions and confidently buying a residential or commercial property.

Purchasing a Property? Know These 10 Real Estate Terms 

These are 10 important real estate terms that a buyer should be familiar with. 

1. Carpet Area

• The carpet area is the actual area inside your home that you can use to place your furniture or use as floor space.
• It also refers to the area of a building that is enclosed within the internal walls and typically does not include the area of walls, balconies, and other spaces.
• When comparing the areas of apartments, it is always better to compare the carpet area rather than the overall area because the latter is often misleading.

2. Built-Up Area

• It refers to the total carpet area that includes the area of internal and external walls and any other area that may be included in the calculation, for instance, balconies or other spaces.
• Generally, some developers use the term ‘Built-Up Area’ to describe the total carpet area.
• Therefore, it is advisable that a buyer should compare the total carpet areas of different apartments when assessing the value for money.

3. Super Built-Up Area

• In most cases, a super built-up area is the combination of the built-up area and some additional percentage for the common areas. 
• This includes the lobbies, stairs, lifts, and other portions that are usually included in the calculations of a property’s value.
• It is always advisable that a buyer should inquire about carpet area, Built-Up Area, and Super Built-Up Area to have a true picture of the value of the property they intend to purchase.

4. RERA

• RERA is the abbreviation for the Real Estate (Regulation and Development) Act and refers to an initiative to increase industry transparency by introducing regulations.
• A RERA registration certifies that a particular project has provided the exact information about the project, its approvals, developer, construction status, and other relevant details.
• It is essential to cross-verify the applicable registration and details on a relevant project website before buying a property. 
• Knowing RERA can be beneficial to make the right choice when buying a property.

5. Sale Deed

• The sale deed is one of the most critical legal documents used when purchasing a property. 
• This document contains information about the transfer of possession of the property and should be thoroughly reviewed before signing.
• Once completed, the sale deed needs to be registered to ensure the official registration of new ownership. 
• Therefore, this document is crucial, and all terms and conditions along with apartment details should be carefully examined before signing.

6. Encumbrance Certificate

• The Encumbrance Certificate (EC) is one of the necessary documents required when buying property. 
• An EC identifies any registered dealings, legal charges, or claims against the ownership of a specific property for a particular period.
• This information can be critical for a buyer to obtain an EC and review the details to ensure that there are no liabilities registered against the property ownership.

7. Guideline Value

• Guideline value refers to a property’s or land’s value as determined by the government for the registration and calculation process of certain charges.
• This value may differ from the market value of a property. 
• The market value is based on the location, demand, infrastructure, accessibility, development, and other relevant factors.
• By understanding the two values, it becomes easier for the buyer to calculate some costs associated with the purchase.

8. Down Payment

• A down payment simply refers to a buyer’s share paid upfront for a property. 
• The remaining percentage can be paid using a home loan or other financing options. 
• For instance, if a property is valued at ₹50 lakh, for example, a buyer can pay ₹10 lakh upfront and charge ₹40 lakh with a home loan.
• However, it is crucial to understand that buyers should not overstretch with down payments because they must also consider registration charges, taxes, interiors, maintenance deposits, and other related costs. 
• The buyer must also consider the amount of down payment when applying for a home loan.

9. Home Loan

• A home loan is a financial facility offered by banks and other approved home finance companies that allow eligible buyers to purchase, construct, or sometimes renovate a house. 
• Almost all home loans have different approval, charges, rates, and terms from different lenders. 
• A buyer, therefore, needs to consider several factors when selecting a home loan.
• The most critical consideration is the overall cost of the loan, not just the rate of interest. 
• A buyer must understand their EMI and overall payment obligation in clearing the loan.

10. Possession Date

• The possession date is the date on which a buyer is expected to take possession of the completed property and is subject to agreement terms and conditions.
• For under-construction property, the possession timeline is a very important aspect that buyers need to consider. 
• Buyers should go through the terms and conditions related to the possession timeline, obligations of both parties, and any other relevant clauses before signing any document.
• Having the right information about the possession timeline will help the buyer to plan finances and other matters related to the sale and purchase of property, like rental arrangements.

Why Knowing Real Estate Terms Matters

Real estate is not just about picking a location and a place of your choice. The buyer needs to know various legal aspects related to property like legal documents, carpet area, super built up area, approvals and much more. For first time buyers, these terminologies might seem daunting so it becomes essential to understand some basic real estate terms. Understanding area measurements will help buyers make an informed decision about the property he/she wishes to purchase.  Knowing about RERA will help the buyer cross-verify project details whereas, terms like sale deed and encumbrance certificate will help the buyer understand legal aspects of buying and selling of property. Similarly, understanding down payment, home loan, possession date will enable buyers to make practical decisions about the purchase.

Make Better Property Decisions

The right property decision begins with the right information. Before finalizing a home purchase or investment, it is advisable to consider the location, construction, fittings, accessibility, clearances, approvals, papers, price, financing, and prospects. It is also essential not to solely depend on ads and assumptions. Before making any decisions, it is important to scrutinize the fine print, ask clarifying questions, and get legal or financial advice, if necessary. The real estate market can be a rewarding long-term investment with the correct due diligence. The more knowledge one has about real estate jargon, the more confident they feel during the buying process.

Final Thought

To conclude, with the right knowledge, evaluation, and a reliable partner in real estate, purchasing a property that meets one’s current and future requirements is a worry-free task. Furthermore, reputed builders like Sakthi Builders are ready to assist first-time buyers in acquiring the necessary expertise and making an appropriate choice.  

FAQs

1. Why is it important for first-time buyers to familiarize themselves with real estate terms?

Familiarizing themselves with real estate terms enables buyers to gain a better understanding of the property, documents, expenses, and contracts involved in a purchase.

2. What is the difference between carpet area and super built-up area?

The carpet area refers to the internal area of the property, whereas the super built-up area generally covers the carpet area plus the proportionate share of common areas.

3. Why is it important to purchase a property under RERA?

RERA aims to promote transparency in real estate transactions and empowers buyers by providing the relevant project information.