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Real Estate Basics by TL's
Real Estate Basics by TL's
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1.4 Basic Terminology used in the industry
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1.4 Definition
Egs. can be- Residential new and old homes, Commercial shopping
centres, Offices , Industrial/Manufacturing buildings, vacant land
and farms.
Properties may be owned by either individuals companies, housing
associations or local authorities
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1.4 Diff. between broker & Consultant
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BROKER CONSULTANT
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1.4 Types of Property hold
Free hold Property
Property where the owner has complete and absolute ownership of the land
and all buildings that stand on the land.
The owner is therefore in a position to do what he wish to do with the
property in accordance with local planning regulations.
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1.4 Types of Property
Commercial Property
Residential Property
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1.4 Residential Property
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1.4 Commercial / Investment or Income Property
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1.4 Types of Property SALE
Property
Sale
Primary Secondary
Sale Sale
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1.4 Primary Sales / Fresh bookings / Original bookings
It is the sales of the property for the first time / Purchase of property
directly from the builder of the property.
The entity buying the property is the first owner of the property.
Direct allotment of the property through various government schemes.
In case of Primary sales the real estate consultant involved in the
transaction charges his service fees only from the builder and not from
the buyer.
Therefore the consultant’s pitch to the customers :
We charge Zero Brokerage.
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1.4 Secondary Sales / Resale
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1.4 CONVERSIONS
1 Bigha = 1008 Sq Yd
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1.4 Components of Total Cost of a Property
2.Other Charges.
exceeding Rs 50 lakhs.
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1.4 Other Charges
Lease rent (L.R.)
EDC / IDC : External development charges / Infrastructure
development charges
Fire fighting charges (F.F.C)
Car parking (Covered)
Club membership
Power back up
Electrification Charges
Preferred Location Charges (PLC’S)
Electronic Meter.
Monthly Maintenance
IFMS (Interest free maintenance security)
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Illustration Question 1
Calculate the cost of 2 BHK of 1000 sq ft. on 10th floor Road facing, without
GST.
BSP - 3500/ psf
L.R. - 65/ psf
I.F.M.S. – 20/ psf
F.F.C. – 40/ psf
PLC
1st- 3rd Floor - 200/psf
4th- 6th Floor - 150/psf
7th- 9th Floor - 75/ psf
10th – Floor - 50/psf
View
Park- 75/ psf Road- 50/ psf
Club Membership- 1 Lac
Parking- 3 Lacs
Meter- 25,000
Power Back up- 15,000/Kva (2 Kva mandatory)
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Illustration Question 2
Calculate the cost of 2 BHK of 1250 Sq ft on 6th Floor Park Facing, Without GST
BSP- 3250 psf
IFMS- 25 psf
FFC- 20 psf
LR- 85 psf
Parking 250000/
Club 75000/
PLC--
G.Floor- 200 psf
1st- 3rd- 100 psf
4th- 6th- 75 psf
View-
Park- 75 psf, Road- 25 psf
Meter- 25000/, Power back up- 20000/ kva
Power back up- 3 kva mandatory
Note- Builder is offering 150 psf inaugural discount
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Provided by the builder mentioning details of how the buyer needs to
pay for the property and at what stages the other charges are payable
by the buyer.
Payment plans
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1.4 Construction Link Plan
This plan requires the buyer to pay 10%- 15% of the purchase price
upfront. The remaining amount is linked to construction milestones.
Total payment stretches till the time the construction of the property is
not completed.
Since the payment is not timed and completely linked to the construction
progress, this plan carries the least risk for the banker & giving a Home
Loan is less risky for Financial Institution.
In case of Home Loan. The buyer pays Pre Emi (Interest) to the banker till
a stipulated date
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1.4 Down Payment Plan (DP)
In this payment plan 95% of the cost of the property is paid within 30 to
45 days of the booking in the project and the remaining 5% is paid at
the time of possession.
For encouraging this payment plan all the builders give handsome down
payment rebates varying from 5% to 12%.
It is the most risky payment plan as 95% of the cost of the property
reaches the builder without any kind of construction
There are many projects in which banks only fund in CLP case and not
in DP case till the construction has not reached a particular stage.
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1.4 Subvention Payment Plan
Subvention means financial support; It involves three parties
– Buyer
– Builder and
– Bank
The bank only gets involved if the project is 100% safe.
It is also popularly known as No PRE EMI Plan as it normally
comes with a No PRE EMI payment till particular date or till
possession.
Pre EMI is borne by Developer at an extra cost on behalf of
customer till subvention period.
Customers EMI starts after Subvention period is over giving
him/her a gap and not creating undue pressure to cut down
monthly expenses.
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1.4 Subvention Payment Plan
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1.4 Assured Return Payment Plan
It is more of a sales technique used by the builder to increase sales.
A Lump Sum payment has be made within 30-45 days of the booking
of the property. Instead of down payment rebate the builder gives
assured return to the buyer for a particular period on the paid
amount, generally till possession.
For example if the cost of the property is 20 lacs and the assured
return is 12% P.a. (for two years) i.e. 1% per month on Complete
Down payment, then the buyer of the property will get Rs. 20000/-
per month for two years.
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1.4 Special payment plan
Payment options which is different from conventional form, usually provided
by the builder to attract the clients. Sometimes backed up by the financial
institutions.
Egs :
40:60
50:50
30:70
40:30:30
25:25:25:25
10:90
It attracts mostly the investor community as they have a chance to exit with
profit after making partial payment of the cost of property.
In case of Home Loan also the buyer pays Interest payment on lesser amount till
possession.
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1.4 Types Of Area
Carpet Area
As the name suggests, the carpet area is the area that can actually be covered by a
carpet. It is the wall to wall distance which makes for the net usable floor area of
the house. Carpet area includes the internal partition walls of your unit but
excludes balcony, terrace or any other common area. On a simpler note carpet area
is the area that can be used inside the unit including internal walls partition, toilet,
bedrooms, drawing room or hall or anything which is inside your unit.
Built up Area
The total of carpet area and outer walls area makes it to built-up area. Built up
area includes terrace, balconies, mezzanine floors etc. The built up area is approx
8-10% more than the carpet area.
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1.4 Types Of Area
Super Built up Area / Saleable Area
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1.4 FAR & FSI
FAR : Floor Area Ratio & FSI : Floor Space Index.
Both of them mean the total area that can be constructed in a
particular piece of land .
Floor Area Ratio is the ratio between total floor area of buildings
on a certain location and the size of land of that location
(constructible land).
A higher ratio usually indicates a dense or highly urbanized area.
Floor area ratios vary based on structure type, such as industrial,
residential, commercial, or agricultural.
As per govt. regulation only 30% area of the total land can be built
for a Group Housing plot.
Total constructable area (after getting approvals) on a builder’s
plot is known as FSI.
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1.4 Township
A development of big area of land normally more than 100 acres
comprising of Plots, Villas, Group housing, Independent Floors
etc.
It also has Schools, Hospitals & Commercial spaces all inside the
area.
The local authorities in certain area have fixed a limit for
minimum land required for developing a township.
In a township all the infrastructure development such as roads
sewage pipes, drainage and electricity poles has to be done by
the builder.
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1.4 Terminologies
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1.4 Terminologies
Site plan: - Means the layout of all the buildings in the complex. It help is
analyzing: -
Direction of the apartment & green area in the project the directions of north
south east and west are marked in the site plan you can easily figure out facing
of a unit/apartment through the site plan.
Combinations of the different sizes in towers sometime different sizes are
marked in different colors or different sizes are mentioned for various blocks on
the top of the block.
Number of Unit/apartments on the floor and numbering plan of the same.
Location of Club house & other amenities in the complex
Location of Parking Parks kids play area etc.
Entry & exit of the entire complex
Revenue Certification- RC happens after payment of minimum Booking
Amount by the customer. It’s Important for salary processing.
Revenue Assurance- RA happens after next payment made by the customer as
per payment plan. It’s important for Incentive payout
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Process of Sale
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