Article#11: Real Estate
The term that we hear on a daily basis, but interpret in a short way like something related to property. Although the idea is correct, there are lot many things associated with this so called “Real Estate”. This article presents a broader perspective of real estate and also highlights on how it plays a vital role in our day to day life.
Any property that comprises of land with its inbuilt natural resources like water or crops can be termed as real estate. It is a legal term used in many countries. There are two types of real estate, one is residential real estate and the other, non-residential real estate.
Residential real estate is the type of property intended for residence or household purpose. There can be many types in this again like a flat or apartment, duplex, individual, Villas and so on. Ever wondered on what is the difference between a flat and an apartment? Well, it’s just that the former one comes under British English and the latter one under American English. A flat is just a part of building or a unit with its own boundaries. The size of a flat can be determined in square feet. For the other types like an individual house or duplex and all, the size is termed in square yards. Duplex is a type of building constructed like a normal house but with a staircase inside to have a separate portion on the top. A villa is a luxurious, large house known for its own amenities like a garden, a Swimming pool, vineyard and so on.
Non-residential real estate includes all the commercial properties like office buildings, industries, hotels, farm lands, hospitals and so on.
Real estate has always got its own importance; may it can be the residential real estate wherein a human expects a roof on his head as a basic need or it can be the non-residential real estate that serves as a means of living for many people. Whatever the reason it is, one needs to have a good understanding on the concept as we are highly associated with it. Most of us dream to have a property of our own especially for residential purpose. Well, there are people who would like to expand their business and earnings with the help of commercial properties of their own. But to have either of these, one has to analyze something called “Real estate trends”, which explains on how the change in real estate happens. For example, the MSN web portal of Microsoft reports that the property values have trended upward every year since world war 2, but they started declining every year since 2006. Internet is a great source wherein we can observe the real estate trends and can proceed accordingly.
Firstly, we need to consider an area wherein we would like to buy, then check if it is feasible one for our purpose like it is a bit comfortable for household purpose or if it is a way better for commercial purpose. This is because there is no meaning in looking for a residence in a place wherein you already have large number of companies/industries established as that would have the cost at its peaks which may/may not be affordable by us and even you may not have the feasibility to get the regular items in maintaining your home as there will not be any required stores nearby. In the same way, if you would like to open your own office/any business in a residential area, it doesn’t sound good because there are chances that it may/may not have the required connectivity with the city, thereby people involved in your work might face difficulties with the regular transport. Moreover, you’ll not get the real encouragement from the people in and around. However, there is an exception in this case. Say, you would like to open a shop with the daily purchased items like a general store in a residential area, it would work out easily as it suits the requirements of everyone around.
Secondly, the market value needs to be analyzed for the real estate. We have something called, “Real estate Appraisal” in which an opinion of value is developed for a property. The appraisal reports are required for loan sanctions, divorces, taxation and to establish a sale price for a property. Usually, in most countries, this process is followed and the appraisers, also known as “Valuation Surveyors” are required to be certified or licensed. Once if the property value falls within your budget and if you are sure that the property would suit your needs may it can be for residential or commercial, then that would be the time for you to proceed further in buying the property.
Having met with the above criteria, say if you would like to buy a residential property, there are few more optional pre-checks to be done. If you believe in horoscope, then you need to get it verified that your house position suits you individually. In the usual case, people say east-facing property would be effective for almost everyone and if it’s a west facing one or other, then you need to get it verified as per your individual horoscope. Well, it just varies from person to person and it depends on one’s faith, thereby it’s an optional check. Then, we have a major issue in most of the cities these days, water problem, the unavailability of ground water. You need to check if there is any such issue in the place where you would like to buy. If yes, then again some more questions, is it that it exists only during summer? Is it that there are specific intervals in a day wherein you have availability of water? How many people are going to stay in your house? If you believe that there are no issues with the answers, this check will be passed. And there is also a chance that there is no water problem at all, hence it’s an optional check. Once everything suits, you need to take a copy of something called “Link documents” from the property owner that contain the history of the real estate and get it verified by your authorized lawyer. If there is no issue, then both the buyer and the seller can go with “Agreement of Sale” in which there will be the price of the real estate quoted and also the advance payment done by the buyer. Once after this, if you would like to avail loan from any bank, you can submit a copy of these documents along with others as specified by the respective bank. Then, on a particular agreed date by both the parties, you can get the registration done wherein you sign the “Sale deed” document post which the original documents of the property will go to the respective bank if you have availed loan. Only 80% of the total price of a property will be granted as loan amount provided you are eligible based on your income and pay slips and remaining 20% should be paid by the individual. With the registration, the rights of a property will be transferred from seller to the buyer. This process is known as “Real estate transaction” as it also involves exchange of money.
When it comes to commercial real estate, in general, such properties are leased rather than sold. The lease periods can be lengthy, often varying from five to ten years. Lot many things exist in such contracts like name and addresses of both the parties, description of the property, sales price, terms of payment, title and title insurance, closing date, conditions to closing, governing laws and so on. Here we have, “Real Estate Investment Trust (REIT)” which is a company that owns many commercial real estate and operates as income producing real estate. REITS are quite similar to the structure of mutual funds for investment in stocks. India approved creation of REITs in 2014.
During purchase in either of the cases, we can have a “Real estate broker/agent” who acts as an intermediate person between both the parties to end on a smooth deal. The agent receives commission from both the parties as he would be the responsible one for matching buyer’s interest of real estate with that of the seller. If you hold such agent when buying a real estate, he’ll look into everything starting from showing you the required type of properties to assistance in the process of registration and even during the post registration when there are name changes required for paying house tax and all. Again it depends on an individual whether to keep such agent or not.
Lastly, to add my experience it almost took one month for me to setup a real estate of my own. I only had a thought that time to buy a flat and didn’t have much knowledge on how all that starts and ends. Thanks to my relatives and friends who have really provided their best assistance in each step during the process. At the time of registration, I didn’t sleep for around 2-3 days due to various issues. But all that struggle looked small when I made my dream come true
:-)
To conclude, Real Estate is a part and parcel of our lives and to whatever extent, we gain knowledge on that, it would be less. Even I say this article just provides a glimpse of Real Estate. So keep knowing about it from all the possible sources that you have. It would definitely help you in reaching your goal if you have something related to this. Also, who knows, someday even you can be the change in this area:-)
This is the end of my eleventh article, “Real Estate”. The next article is going to be on something which most of us are passionate about. Till then have a great time:-) Cheers!!
Any property that comprises of land with its inbuilt natural resources like water or crops can be termed as real estate. It is a legal term used in many countries. There are two types of real estate, one is residential real estate and the other, non-residential real estate.
Residential real estate is the type of property intended for residence or household purpose. There can be many types in this again like a flat or apartment, duplex, individual, Villas and so on. Ever wondered on what is the difference between a flat and an apartment? Well, it’s just that the former one comes under British English and the latter one under American English. A flat is just a part of building or a unit with its own boundaries. The size of a flat can be determined in square feet. For the other types like an individual house or duplex and all, the size is termed in square yards. Duplex is a type of building constructed like a normal house but with a staircase inside to have a separate portion on the top. A villa is a luxurious, large house known for its own amenities like a garden, a Swimming pool, vineyard and so on.
Non-residential real estate includes all the commercial properties like office buildings, industries, hotels, farm lands, hospitals and so on.
Real estate has always got its own importance; may it can be the residential real estate wherein a human expects a roof on his head as a basic need or it can be the non-residential real estate that serves as a means of living for many people. Whatever the reason it is, one needs to have a good understanding on the concept as we are highly associated with it. Most of us dream to have a property of our own especially for residential purpose. Well, there are people who would like to expand their business and earnings with the help of commercial properties of their own. But to have either of these, one has to analyze something called “Real estate trends”, which explains on how the change in real estate happens. For example, the MSN web portal of Microsoft reports that the property values have trended upward every year since world war 2, but they started declining every year since 2006. Internet is a great source wherein we can observe the real estate trends and can proceed accordingly.
Firstly, we need to consider an area wherein we would like to buy, then check if it is feasible one for our purpose like it is a bit comfortable for household purpose or if it is a way better for commercial purpose. This is because there is no meaning in looking for a residence in a place wherein you already have large number of companies/industries established as that would have the cost at its peaks which may/may not be affordable by us and even you may not have the feasibility to get the regular items in maintaining your home as there will not be any required stores nearby. In the same way, if you would like to open your own office/any business in a residential area, it doesn’t sound good because there are chances that it may/may not have the required connectivity with the city, thereby people involved in your work might face difficulties with the regular transport. Moreover, you’ll not get the real encouragement from the people in and around. However, there is an exception in this case. Say, you would like to open a shop with the daily purchased items like a general store in a residential area, it would work out easily as it suits the requirements of everyone around.
Secondly, the market value needs to be analyzed for the real estate. We have something called, “Real estate Appraisal” in which an opinion of value is developed for a property. The appraisal reports are required for loan sanctions, divorces, taxation and to establish a sale price for a property. Usually, in most countries, this process is followed and the appraisers, also known as “Valuation Surveyors” are required to be certified or licensed. Once if the property value falls within your budget and if you are sure that the property would suit your needs may it can be for residential or commercial, then that would be the time for you to proceed further in buying the property.
Having met with the above criteria, say if you would like to buy a residential property, there are few more optional pre-checks to be done. If you believe in horoscope, then you need to get it verified that your house position suits you individually. In the usual case, people say east-facing property would be effective for almost everyone and if it’s a west facing one or other, then you need to get it verified as per your individual horoscope. Well, it just varies from person to person and it depends on one’s faith, thereby it’s an optional check. Then, we have a major issue in most of the cities these days, water problem, the unavailability of ground water. You need to check if there is any such issue in the place where you would like to buy. If yes, then again some more questions, is it that it exists only during summer? Is it that there are specific intervals in a day wherein you have availability of water? How many people are going to stay in your house? If you believe that there are no issues with the answers, this check will be passed. And there is also a chance that there is no water problem at all, hence it’s an optional check. Once everything suits, you need to take a copy of something called “Link documents” from the property owner that contain the history of the real estate and get it verified by your authorized lawyer. If there is no issue, then both the buyer and the seller can go with “Agreement of Sale” in which there will be the price of the real estate quoted and also the advance payment done by the buyer. Once after this, if you would like to avail loan from any bank, you can submit a copy of these documents along with others as specified by the respective bank. Then, on a particular agreed date by both the parties, you can get the registration done wherein you sign the “Sale deed” document post which the original documents of the property will go to the respective bank if you have availed loan. Only 80% of the total price of a property will be granted as loan amount provided you are eligible based on your income and pay slips and remaining 20% should be paid by the individual. With the registration, the rights of a property will be transferred from seller to the buyer. This process is known as “Real estate transaction” as it also involves exchange of money.
When it comes to commercial real estate, in general, such properties are leased rather than sold. The lease periods can be lengthy, often varying from five to ten years. Lot many things exist in such contracts like name and addresses of both the parties, description of the property, sales price, terms of payment, title and title insurance, closing date, conditions to closing, governing laws and so on. Here we have, “Real Estate Investment Trust (REIT)” which is a company that owns many commercial real estate and operates as income producing real estate. REITS are quite similar to the structure of mutual funds for investment in stocks. India approved creation of REITs in 2014.
During purchase in either of the cases, we can have a “Real estate broker/agent” who acts as an intermediate person between both the parties to end on a smooth deal. The agent receives commission from both the parties as he would be the responsible one for matching buyer’s interest of real estate with that of the seller. If you hold such agent when buying a real estate, he’ll look into everything starting from showing you the required type of properties to assistance in the process of registration and even during the post registration when there are name changes required for paying house tax and all. Again it depends on an individual whether to keep such agent or not.
Lastly, to add my experience it almost took one month for me to setup a real estate of my own. I only had a thought that time to buy a flat and didn’t have much knowledge on how all that starts and ends. Thanks to my relatives and friends who have really provided their best assistance in each step during the process. At the time of registration, I didn’t sleep for around 2-3 days due to various issues. But all that struggle looked small when I made my dream come true
:-)To conclude, Real Estate is a part and parcel of our lives and to whatever extent, we gain knowledge on that, it would be less. Even I say this article just provides a glimpse of Real Estate. So keep knowing about it from all the possible sources that you have. It would definitely help you in reaching your goal if you have something related to this. Also, who knows, someday even you can be the change in this area
:-)This is the end of my eleventh article, “Real Estate”. The next article is going to be on something which most of us are passionate about. Till then have a great time
:-) Cheers!!
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