For clients and sellers alike, understanding real estate terms is a very important move. To help explain and know what a future homebuyer would be paying, real estate terms should be well-used and understood. To help you, we’ve listed down some of the basic real estate terms you might encounter during your homebuying journey.
The Real estate market
Before getting to know some of the basic real estate terms, imagine yourself finally having the capability of buying your first condo or house and lot. You have been working so hard to get that promotion, saving so much limiting all the pleasures others just splurge on, just to reach that goal your eyes are fixed on the entire time. You are now financially ready and excited to search the market for this jaw-dropping achievement that will make you and your family members proud.
According to the most recent study done by Colliers: Residential Property Market Report for the 4th Quarter of 2021, the Omicron variant of Covid-19 delayed the anticipation of recovery of our country in 2021, especially in the real estate residential market. However, it is advised to look out for a brighter and more optimistic 2022. This is likely due to the improving business and consumer confidence that spilled over the residential market. As stated by Joey Roi Bondoc, Associate Director and Head of Research: “The Philippine economy is bound for rebound in 2022. We see the economic expansion supporting demand in the residential sector, whether in the pre-selling or secondary markets. While we saw initial headwinds at the start of the year, especially the spread of the Omicron variant, the gradual return of foreign professionals and turnaround in business and consumer confidence should help fuel the take-up of more residential units. We also see rents and prices recovering in the next 12 months. These indicators bode well for the residential market.”
This also means that this is the best time for you to search the market for a property that is still at its most affordable price and be more convinced that its value will rise in the following years or even months! Real estate developers will be more aggressive in their efforts to be more attractive to their market. Low interest rates or more advantageous payment terms will be offered by almost every developer while banks and other entities provide lighter payment methods for their home loan process. Everything is looking good and you are getting more and more confident now because of this.
Read Also: A comprehensive guide to bank housing loans in the Philippines
So, you start your house hunting quest by searching for the most reliable source of information today – the Internet. As your eyes pass and your finger scroll through hundreds (or even thousands!) of listings available, you had an epiphany. A realization that came to you when everything seems to be too late. You don’t understand a single thing about property buying! Real estate terms you’ve never heard of, jargon, and abbreviations are being thrown by your agent here and there and you don’t seem to understand what ROI or DOAS means. You read listings and go to developer websites but the description, requirements, or analogies most of the time overwhelms you.
Vocabulary, how important is it?
As it turns out, vocabulary is also an important part of your homeownership preparations. Much of the different industries in our modern economy use their own set of specialized technical language they understand, without further explaining the meaning or reason behind it. We apply this language to conduct efficient communication with colleagues and partners in the industry that leads to better working conditions for everyone. Learning the jargon of the real estate industry best helps you in understanding the business and most importantly, being on top of your purchase. This means that you know where every centavo goes because you recognize that this is hard-earned money.
As much as resources are important when purchasing property, basic knowledge about the industry itself is also paramount in the desire to possess a valuable home. As part of Bria Homes, Inc.’s and Vista Land Lifescapes, Inc.’s effort to provide quality service to their valued clients, this essential guide will help you understand the terms, jargon, and abbreviations most developers and real estate practitioners use to advance your knowledge in this field.
Here is the list of Real Estate terms you should know about:
The market value of a certain property is determined by a licensed real estate appraiser. This is based on the property’s current market value based on the comparable homes sold in the area as well as the investigation of the current status of the property. The beauty of purchasing a property from a developer like Bria Homes, Inc. is that the value of the property being sold is already appraised, and applying for a home loan will not be as hard as purchasing from the owner of the property. It will always be easier to find a newly built house and lots as the value of the land itself will be competitive with the current market value of properties around the location.
You might need a licensed real estate appraiser before deciding to buy any property, so they can effectively determine the value of the property you are eyeing especially if you are going to transact with the owner directly.
Read Also: What increases your home’s value?
2. TCP – Total Contract Price / Net Price
The sum of the selling price of the property including taxes and processing (miscellaneous) fees. The term miscellaneous or processing fees refer to the amount of money incurred when processing certain government procedures (transfer tax, real property tax, registration fees, etc.) or may also include processing fees from the developer’s end. However, there are some real estate developers who doesn’t include the miscellaneous fees in the payment term they provide, and that the payment will be separate from it. Promotions or discounts may be deducted as well from the total contract price depending on what is available. The Total Contract Price is an important piece of information you should get, first and foremost, before choosing different payment plans offered by your developer.
3. Payment Term, Monthly Amortization, & Payment Schedule
This refers to plans provided by different developers (There might be different words used per developer but this still pertains to the payment plan provided by them) for their buyers to gradually process writing off the initial cost of an asset.
Simply put, if you want to know the total payment you will have to take care of every month, the amortization will show you this. It is the plan provided by developers to let buyers check if the monthly payment can be covered by their buyer’s current financial status. Each developer will provide you with different payment terms that you can choose based on the different payment types they have (Cash or Deferred Payment).
The best step for this is to have your real estate agent provide you with payment term options you can choose from. You can talk to your agent about the advantages of getting an extended amortization schedule versus paying it in cash.
4. In-House Loan, Bank Loan, or Pag-IBIG Home Loan
Most of the payment terms you are going to choose almost always include a bulk payment in the last month of their term. This is called the “Balance” or “Lump Sum” and almost all the time, this is financed by different lending entities. The most commonly known real estate developers have their own partner banks that will help you conveniently get housing loans. Some will also provide the option to seek financing from the Home Development Mutual Fund (Pag-IBIG). If both options are not available, you might also be offered to opt for In-House financing. The important factors to consider are the terms provided by these entities. Will this be favorable to your income? Will this help you accommodate your living situation? It’s always best to seek advice from your agent about these decisions before choosing which options will best work for you.
Read Also: Pag-IBIG Housing Loan vs. Bank Housing Loan
5. Contract to Sell
Since buying a real estate property isn’t like buying your usual gadget, a contract that serves as legal proof that the transaction has taken place will be important, much like a receipt you get when you purchase an item from the store. This can also be defined as a legally binding document proving both parties (buyer and seller) reached an agreement regarding the sale of the property. This is accomplished by submitting all the important information and must be present in the documents provided. Once this document is completed and has been signed by the buyer and the seller, the creation of the deed of absolute sale will commence.
6. Deed of Absolute Sale
The deed of absolute sale or more commonly known as the deed of sale is a document that serves as a proof that the obligations from both parties (buyer and seller) are already considered closed. This is produced after the contract to sell has been completed. This document basically states that all rights to the property (house and lot or condo) are now transferred to the buyer and that it proves and records the sale of the property.
7. Transfer Certificate of Title / Condominium Certificate of Title
For buyers of house and lots, the Transfer Certificate of Title (TCT), which is a piece of document mainly called as “title”, is the certificate stating the ownership of the land itself and is provided by government offices like the Registry of Deeds (RD), Department of Agrarian Reform (DAR), or Department of Environment and Natural Resources (DENR). The ideal process is for all titles to be registered in the Registry of Deeds but sometimes comes from DAR or DENR. Nonetheless, titles should still be registered in RD. It is best to purchase from real estate developers like Bria Homes, Inc. since all government transactions are done internally, and buyers only need to take care of the payment terms and document submission.
8. RFO – Ready for Occupancy
The term Ready for Occupancy refers to structures readily available for use. This means that the construction for a certain condominium unit or house and lot is already done and is only waiting for the property to be paid for the use of the buyer. This type of property is what buyers are commonly looking for in the market since the construction of pre-selling units lasts for at least 4-5 years. When it comes to options, there aren’t a lot of it. RFO might still be the best option for you depending on the urgency of your needs.
One key advantage in purchasing a property currently in its pre-selling stage is that the price will be at a lower cost rather than purchasing a built one (RFO). There can be more options when choosing to buy pre-selling properties, starting from the flexible payment terms you can choose from down to the freedom to select your desired unit. The term pre-selling is used when a developer gets the license to sell for a specific property or development even in its construction or groundbreaking stage. The downside to this is sometimes buyers are searching for fully built properties that they can immediately move in to. Always ask for the project’s estimated turnover date to properly manage your expectations on when can you use the property.
Read Also: Pre-Selling Vs. Ready For Occupancy: Which Suits You Better?
10. SPA – Special Power of Attorney
If you are in another country or will not be physically available to transact with your agent, a Special Power of Attorney is what you need. An SPA is a piece of legal document that gives authorization to a certain individual of your choosing to process transactions on your behalf. This person will be allowed to sign contracts or fill out forms and do all the paperwork for you. In certain scenarios where the buyer is based abroad, the SPA should be consularized so it can be legally used in the Philippines. An SPA (Special Power of Attorney) executed in the country need only to be notarized. Be sure to have a trusted person to represent you in these types of transactions.
11. Notarization / Consularization
The act of notarizing a certain document is important for its legal use. This is applied to all forms or contracts produced by both buyer and seller in real estate transactions. Consularization, on the other hand, is almost the same as notarization but is mainly done if the documents are coming from a different country and need to be used in the Philippines.
No matter how hard it may seem to understand everything in this property game, Bria Homes, Inc. will provide all the knowledge you need so the experience of buying will be incomparable to others. To learn more about the country’s best quality and affordable spaces designed for every Filipino family, you may visit their website and social media page.
Written by Gene Llanes