10 Real Estate Terms You Must Know Before Investing

The real estate market can be confusing for first-time investors, so it is good to familiarize yourself with often-used terms. Given below are 10 terms you must know before venturing into real estate:

1. Return on Investment - This is a measure of the profit gained on an investment. Calculated by dividing the net profit by the total cost of investment and determines the profitability of the investment.

2. Appreciation - This is the increase in the value of a property over a period of time. Appreciation is influenced by factors, including location, demand, and physical and social infrastructure.

3. Sale Agreement - This is an agreement entered into between the seller and the buyer of the property. This document usually specifies the time for completion and payment details on the property.

4. Sale Deed - A compulsory document, this is a legal document transferring the ownership of the property in exchange for a price. A sale deed confirms ownership of property.

5. Carpet Area - RERA specifies the carpet area as the net usable area in a property. This is the area of the property that can be covered by a carpet. This does not include the areas covered by walls, balconies, etc.

6. Built-up Area - This term refers to the entire area of the residential unit. The built-up area includes the carpet area, wall thickness, and area contained in the balcony.

7. Stamp Duty - This is the legal fees payable on documents in a property sale that are required to be filed by law.

8. Loan Agreement - A document stating the written contract between a lender and a borrower of a loan that specifies the terms and conditions of repayment.

9. Down Payment - This is the sum of money that a buyer has to pay upfront in a real estate transaction.

10. Collateral - This is personal belongings that are pledged as a guarantee for a loan that is taken.

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