Real Estate Terminology for Beginners
Many real estate terms are used for buying, selling or renting a property. Some words are easy to understand while others are the technical terms that need explanations. Here is the real estate terminology for beginners.
Real Estate
A property which consists of land and building on it is known as real estate. Agricultural, Commercial, Industrial and Residential are the four types of real estate.
Investment Property
A property which is bought with the intention to earn the profit is known as investment property. Profit is earned either in form of rent or by further resale of the property.
Estate Agent
A person who facilitates the selling, renting or managing of properties is known as an estate agent. Realtor also acts as an intermediary between buyer and seller.
Leasehold Property
When a property is leased or held by a person for certain time period it is known as leasehold property. After the lease period property is handed over to the original owner.
Freehold Property
The outright ownership of a property is known as freehold property. The owner enjoys the freedom to use property or sell it.
Landlord
Landlord is the owner of a property which is leased or rented to a tenant.
Tenant
Tenant is a person who occupies a property for certain time period which is rented by the owner.
Tenancy Agreement
Tenancy agreement is also known as the rent agreement. It is a written agreement between the landlord and the tenant. It records the duration of the tenant’s stay and rights and duties of both landlord & tenant.
Advance Rent
It is the money which is paid in advance to the landlord by the tenant as security deposit. Advance rent is normally two months’ rent and is returned at the end of tenancy.
Withholding Tax (WHT)
This is the Federal Government Tax. It is paid by both buyer and seller of a property.
Stamp Duty (SD)
SD is a provincial government tax that is only paid by the buyer of a property for the registry.
Title Transfer
It refers to the transfer of property ownership. Most people hire lawyers for the tile transfer. Tile transfer gives the ownership to the buyer. Most buyers hire the lawyers to transfer the property on their name.
Base Rate
It is the rate set by the central banks. Below this rate banks can’t lend money to the customers.
Buyer’s Market
A market where properties are more than the buyers is known as buyer’s market. In a buyer’s market, property buyers are at advantage as they have more property options. Buyer’s market is the indication of falling property prices due to low demand.
Seller’s Market
A market where properties are less than the buyers is known as seller’s market. In a seller’s market, property sellers are at advantage as they sell their properties at high prices. Seller’s market is the indication of rising property prices due to high demand.
Buy to Let Investment
An investment made to buy a property which is then rented out is known as buy to let investment. The return on buy to let investment is in form of monthly rent.
Commission
On real estate deals realtors get the commissions. For residential deals commission of realtors is 1% from both buyers and sellers. On commercial deals the commission of reactors is 2% from both buyers and sellers. Whereas on rent deals the commission is half month’s rent from both parties.
Inspection
Buyer visits the property before buying to known its condition. This is known as the property inspection.
House Price to Income Ratio
House price to income ratio is the numbers of annual income required to buy a house. For example if a person pays five years income to buy a home then the ratio is 1:5. This ratio is used by the experts to known the affordability of buyers.