Real Estate Terms and Expressions you need to know

If you are hoping to get into real estate, there are many terms and expressions that you need to know about. The real estate market is filled with many new terms that may not be familiar and need to be brushed up before you start with the profession. Whether you plan on buying properties or selling them, knowing the terms and expressions will help you understand better. Here is a real estate glossary that you need to know before you start with your business.

Appraisals

The valuation of the property is known as real estate appraisal. To get a loan from your bank the property has to be appraised by calculating the property’s current market value as well as comparison with other property in the same area.

Adjustable-rate mortgage

This is a type of conventional loan along with a fixed-rate mortgage. In this, the interest rates change throughout the loan in years or intervals.

Assessed value

This is the value of the home decided by the public tax assessor to figure out how much tax the owner owes.

Amortization

Amortization combines interest and principal in payments without just paying off interest at the beginning.

Buyers agent

This is the agent who will be representing the buyer for the purchases and deals with the properties.

Commission 

This is the fee that is paid to the real estate by the buyers and sellers when the deal is closed. It is based on the price of the property that is decided to be sold. In UAE, the commission rate is about 5-6% of the total amount.

Closing

When the buyer and sellers officially sign the contract and the property is transferred to the buyer legally it is known as closing.

Closing costs

This includes property registration, mortgage registration, processing fees and other costs in UAE, which charges 5-7% of the total sales price.

Cash reserves

The balance money remains after the down payment and closing costs.

Comparative market analysis

This report is the analysis of comparison of the homes in the particular areas with accurate values.

Contingencies

Contingencies are a term that refers to the conditions that have to be fulfilled for the finalization of purchases of a home.

Dual agency 

This represents both the buyer and seller as one agent.

Down payment

This is the minimum amount a buyer is required to pay the mortgage lender. It would probably be just 5-20% of the total value.

Equity

Equity is the money of the property after all the fees that have been paid. The value may vary from time to time as property prices fluctuate often.

Escrow account

It’s an account made by the lender in which he’ll receive the monthly payments from the homeowner.

Emirates interbank offered rate (EIBOR)

EIBOR is a fixed rate used by banks in the UAE to lend to each other. The rate can affect your plan on investing or selling properties in the UAE.

Fixed-rate

A fixed-rate mortgage is when the interest paid on the amount you have borrowed is fixed for some time.

For sale by owner (FSBO)

FSBO is when the property is put up for sale by the owner instead of using a real estate agent as a middleman.

Freehold ownership

The ownership is completely the buyer’s and free to sell or lease his own at his own will. Foreign investors are encouraged to buy real estate in the freehold areas in UAE.

Home insurance

It is important to protect your home after purchase against losses and accidents. You can get suitable insurance covers that meet your needs in the UAE.

Inspection

Inspection is the process of checking the property before accepting the offers to avoid repairs or costs that may occur late if failed to do so.

Islamic mortgage

In Islamic law, it is not allowed to charge interest on the loan, therefore an Islamic mortgage that follows the Sharia law can be used to mortgage the property.

Listing agent

This is the agent who will be representing the sellers with the sale of properties.

Lease

Is when the property is under the contract for use of the property for over a specific period in exchange for regular payments.

Lessee, lessor and agent

The landlord who owns the property and grants the lease is the lessor. And the tenant who rents it is the lessee. The leasing agent is the one who handles leasing real estate properties.

Leasehold ownership

When the property is bought on leasehold the buyer owns it for 99 years.

Market value

This is the value of the property that stands in the competitive market. With appraisals and comparisons, a fair market value will be decided.

Mortgage Broker

A mortgage broker assists you in arranging a loan to borrow to purchase the property.

Mortgage interest

Mortgage interest is the interest charged on the loan used to purchase the home

Memorandum of Understanding (MOU)

Is the agreement signed by both buyer and seller which is put together by the real estate agent. It includes terms, conditions and the ownership of the property.

No objection certificate (NOC)

NOC is a legal document that is required by the UAE which confirms no objections from the sellers to the buyer from the purchase of the property.

Offer

Offer is the price offered by the buyer to the seller.

Pre-approval letter

This is provided by the bank which states an estimate that the bank will lend the person.

Principal 

It is the amount of money that is borrowed to purchase the property.

Real estate agent

The real estate agent is the one with the real estate license who works under real estate brokers and helps both buyers and sellers of the property.

Refinancing

This is when you replace your previous loan with a new loan and have new rates and payment structures.

Return on investment (ROI)

This allows you to figure out the amount you have received in ratio with the amount you have invested.

Security deposit

It’s 5% of the property yearly rent that has to be paid to the landlord and is refundable towards the end of the contract. This is paid as security in case of any damage caused while you use the property.

Title deed

This is the legal document that states the transfer of the ownership from the seller to the buyer.

Variable-rate

Unlike fixed rates, the interest rates of the variable rate mortgage change over time with inflation.