You are on the verge of spending the whole of your lifetime earnings on buying a house – imagine that! Do you think you will be able to sign on the dotted lines without knowing what entails in the sales agreement? There is entirely a different world of confusing terms, waiting for you on the contract table, which you must master before reaching this stage. To make your life simpler, here is an overview of important real estate terms for buyers that can help you decode the real estate terms and the sales agreement better.
Understanding what you are paying for is the first requirement for enabling a successful sales deal. You may speak to real estate professional experts like HousingMan for knowing the real estate world better. Some of the common real estate investing terms for beginners, which help you know the property terms better are:
- Carpet area: The carpet area is the area of the housing unit excluding the wall area. While calculating the carpet area, the balcony area and terrace space is also taken into consideration. It is smaller than the built-up area.
- Built-up area: This is the whole constructed area comprising of walls, balcony space, ceilings up to the inner side of the walls. It includes carpet area too. Many of the builders are offering rates on built-up area.
- Super built-up area: This area includes common areas of the building too, such as, staircase, lobby, etc. When your builder tells you the price on super built-up area, it is worth questioning as this area should be proportionately divided into the flats on the basis of the usage pattern. As a flat owner, the buyer should not agree to the price based on super built-up area.
Some terms that you may find in sales agreement
A sales agreement is a token of mutual consent between the buyer and the seller. So, if you do not know what you have consented to, the agreement is simply void. So, here are some of the real estate terms you may pin-point in a sales agreement:
No-access clause
This is an important clause in a sales agreement and it bars the buyer from visiting the property he intends to buy completely or more than once. Such clause is quite unsuitable and is certainly against the interests of the buyers. The no-access clause is mostly mentioned in the sales agreement for those properties that are currently occupied by a tenant or third party.
Even in the situation where the property under question is pre-occupied an informal arrangement for visit on mutual consent between the tenant (or current occupant) and prospective buyer can be made. Thus, no-access clause does have a solution; you need to be tactful enough to turn this clause into your favor.
As is, where is
In a sales agreement, the seller may keep the condition ‘sold as is, where is’. This means the property, in whatever state it is, is being sold. If there are any damages, the buyer is supposed to bear the cost of getting repairs done. In the initial inspection, if the damage is caught easily and seller agrees to get it repaired on his expense, the clause stating the same should be included in the sales agreement.
Earnest Money Deposit
Also known as token amount, this payment is collected by the seller in order to seal the contract and for acknowledging the seriousness of the intention. But, there is a catch! In many cases, the sellers do not return the earnest money deposit if the deal does not end on a positive note. Therefore, to reduce the losses on the buyer’s end, they can choose to fix this deposit at 2% of the sale value. Also, the EMD should be mentioned in the final draft and deducted from the final payment as well.
Acquisition cost
This is one of the very important real estate terms for buyers as they must know that the process of acquisition also carries some cost. The buyer needs to pay legal fees, contract fees, brokerage charges and others while putting the sales contract across the table. HousingMan can help reduce the acquisition cost by providing full-fledged buying support.
Benami ownership
The hottest term of the present times; something no one would want to get associated with. This means that the title of property is shown on papers in the name of a person who is not the owner in actual. People have been using this forged method to evade taxes or to cover the black money. A buyer should not follow this buying style if doesn’t want to get caught into the authorities’ trap.
Commercial property
Commercial property can be a land that is supposed to be used for building of a shop or any business establishment. This can also be a house serving the same purpose. It is normally more expensive than a residential property and also delivers better returns.
Common areas
A common area is a feature in the premise that is used by all the members of the homeowners’ association. Community center, club-house, swimming pool, gymnasium, recreation room, garden etc. are some of the areas that are common to all the residents. While signing the sales agreement, one must ensure that he is not charged for these facilities in a disproportionate manner.
Co-ownership
If the property is owned by two people rather than one, the ownership type is said to be co-ownership. This term is quite useful when the owner requires loan and also for understanding the tax liability.
These are a few real estate investing terms for beginners to help understand the terms in the real estate segment. It is better to be aware when you are planning to venture out into the segment. Because being aware is better than being sorry. Your awareness is the ticket to your dream house. Dealing in real estate can become a bad experience because of various confusing terms; hence, get the concepts clear in mind for better peace of mind.
Further, with HousingMan – www.housingman.com you can know all about the real estate world with experienced, real estate professionals. We help you with all your real estate needs. Right from helping you understand your housing needs, features, budget, property-type, location and lots more. We help you find your ideal home, providing you with the best of options. What more? We get in direct touch with the builder and get you the best offers and discounts on properties! Find your home today!
