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Real estate investments have been on the rise recently; however, it is important to know the key terms related to real estate before considering this sector to invest in. This is because when you consider investing in real estate, the complexity of the real estate property terms may overwhelm you.

Numerous real estate terms might be unfamiliar and confusing, leading to misunderstandings and problems while finalizing the deal with the property seller. Unfortunately, some agents or sellers may take advantage of this lack of knowledge of the property buyers. Therefore, it is crucial to know the essential real estate terms to make informed decisions throughout the investment process.

In this blog, we’re providing a list of important real estate terms and their meanings that you might not have previously known the meaning of. When you familiarize yourself with these key property terms, you will be able to confidently navigate the real estate market and make informed investment decisions.

Read the blog to learn about some of the most important real estate terms that you must know to make profitable real estate investments.

1. Carpet Area

When you search for a real estate investment, you come across the term "carpet area" quite often. It is a real estate term that is used to show the actual usable area of a property, i.e., an area that a carpet can cover. Hence, the term “Carpet Area” represents the area that can be utilized within the property. The Carpet Area excludes the thickness of the walls.

However, when considering investing in a real estate property, it is important to understand the carpet area of a property, as it can give you a better idea of the space available for your needs. It is also a crucial factor in determining the property’s value and is generally used to calculate rentals or sale prices.

2. Built-up Area

The built-up area is again an important term in the real estate sector and is a crucial factor to consider while evaluating a property. Carpet area and built-up area may sometimes confuse you because many people use them interchangeably, but they’re not the same and have distinct meanings.

The built-up area of a property includes the carpet area along with the area taken up by walls, which means the built-up area also includes the thickness of the walls. Hence, the built-up area represents the entire space occupied by a particular property, including walls, balconies, and other projections.

3. Sale Deed

When you think of investing in real estate, you will hear the term "Sale Deed". A sale deed is a recorded document of all the sale events. It is a legal document that both the buyer and the seller sign to keep a record of the sale. It is important to sign the sale deed because no real estate transaction can be considered valid without it.

4. Stamp Duty

Stamp duty is a tax that the government collects during real estate transactions. However, stamp duty is not fixed, and it differs from state to state. For instance, in some cities, it is 3%, while in others, it might go up to 8%.

Stamp duty for female homeowners is much lower than that for male homeowners. If you register your property in the name of a female family member, you could save a considerable amount on stamp duty.

5. Title Deed

A title deed is a legal document that proves ownership of a property. It is important to have a title deed; otherwise, you won’t be able to prove ownership of a property.

It is advisable to check the title deed thoroughly to ensure the property owner’s name matches the name on the original title deed document. To be on the safe side, investigate the entire chain of title deeds, from the allotment stage to the last owner.

6. Agent

There are two types of agents in the real estate market: the buyer's agent and the listing agent.

Buyer's Agent: A licensed professional who helps buyers find suitable properties and negotiate prices.

Listing Agent: A professional who works with sellers to find buyers and negotiate deals.

7. Adjustable-Rate Mortgage

An adjustable-rate mortgage is a loan in which the interest rate changes after an initial fixed interest rate period. Your interest rate may increase or decrease according to market conditions. It is important to understand all terms and conditions before opting for this type of mortgage.

Conclusion

Investing in real estate is one of the biggest decisions of your lifetime. Hence, you must understand all the terminologies used during the investment process to save yourself from any potential trouble or misunderstandings. Read our other blog, "How Changing Lifestyles are Redefining Homeownership in 2024," and stay tuned for more insights into the real estate market.