What is the difference between a real estate agent and a real estate broker?
Most states require real estate sales professionals to be licensed by the state, so that they can control education and experience requirements and have a central authority to resolve consumer problems. The terminology used to identify real estate professionals varies a little from state to state. Brokers are generally required to have more education and experience than real estate salespersons or agents. The person you normally deal with is a real estate agent or salesperson. The salesperson is licensed by the state, but must work for a broker. All listings are placed in the broker’s name, not the salesperson’s. A broker can deal directly with home buyers and sellers, or can have a staff of salespersons or agents working for him or her.
Why should I use a real estate salesperson?
A real estate salesperson is more than just a “sales person.” They act on your behalf as your agent, providing you with advice and guidance and doing a job – helping you buy or sell a home. While it is true they get paid for what they do, so do other professions that provide advice, guidance, and have a service to sell –such as Certified Public Accountants and Attorneys
The Internet has opened up a world of information that wasn’t previously available to homebuyers and seller. The data on listings available for sale is almost current – but not quite. There are times when you need the most current information about what has sold or is for sale, and the only way to get that is with an agent.
If you’re selling a home, you gain access to the most buyers by being listed in the Multiple Listing Service. Only a licensed real estate agent who is a member of your local MLS can get you listed there – which then gets you automatically listed on some of the major real estate web sites. If you’re buying or selling a home, the MLS is your agent’s best tool.
However, the role of an agent has changed in the last couple of years. In the past, agents were the only way home buyers and sellers could access information. Now agents are evolving. Because today’s home buyers and sellers are so much better informed than in the past, expertise and ability are becoming more important.
The real estate agent is becoming more of a “guide” than a “salesperson” — your personal representative in buying or selling a home.
I have a family friend who is a Realtor. I like her and she is a help but she gives me one price to sell my home for and I think it is too low. So I called another agent who suggested a price more in line with my expectations. Who do I choose?
You might want to consult a couple more Realtors on the market value of your home. Most of the estimates should be in the same ballpark.
It could be that your friend is being more honest with you about the value of your home and the other Realtor gave you a higher number because he already knew you expected it. This is called “Buying a Listing” and is the subject of an article on our web site.
Or it could simply be that your friend is a good friend, but not that great of a real estate agent.
Mixing business and friendships is always risky to the friendship. On the other hand, if your friend is truly competent and was providing wise advice, she may be offended if you ignore the advice and choose another agent.
I have to make a choice between an updated home in an older neighborhood or a newer home in a more modern neighborhood. The home in the older neighborhood has almost everything I want and is much larger, but which makes the most sense as an investment?
If your goal is to buy a home for it’s resale value and the one you are thinking of buying in the older neighborhood is at the upper end of values for that neighborhood, then it may not be the wisest choice. If it is similar or lower in price to the others, then there should be no problem, because pricing should be considered in relation to the local neighborhood and not compared to homes in other neighborhoods (for the most part)
Plus, is it a neighborhood on the decline, or are others going to be fixing things up, too, so that it is a neighborhood that is improving? It could turn out to be a very good deal as long as you don’t “overpay” because of the recent improvements.
Remember that you also buy a home for it’s value to you as a “home,” and that is something else you should consider. Which neighborhood would you AND your family feel most comfortable in?
When buying a new home, what upgrades should we go for? What holds the most value? Do we upgrade the lot? Pick more square footage in the house? Add an extra bedroom?, etc.
A lot depends on why you are buying the house. Are you buying it mostly as a home or mostly as an investment? There is a difference.
For the most part, upgrades are high-profit items for builders. They aren’t designed to enhance the value of the house, but make you happier with the house you do buy.
If you are looking at your home as an investment, then you buy from the smaller to medium size in the tract and spend only a minimal amount on upgrades. If you are looking at your purchase as a home, then you select upgrades that will enhance your quality of living.
One rule of thumb is to always upgrade the carpet and padding.
When buying a new home, what upgrades should we go for? What holds the most value? Do we upgrade the lot? Pick more square footage in the house? Add an extra bedroom?, etc.
A lot depends on why you are buying the house. Are you buying it mostly as a home or mostly as an investment? There is a difference.
For the most part, upgrades are high-profit items for builders. They aren’t designed to enhance the value of the house, but make you happier with the house you do buy.
If you are looking at your home as an investment, then you buy from the smaller to medium size in the tract and spend only a minimal amount on upgrades. If you are looking at your purchase as a home, then you select upgrades that will enhance your quality of living.
One rule of thumb is to always upgrade the carpet and padding.
I have to make a choice between an updated home in an older neighborhood or a newer home in a more modern neighborhood. The home in the older neighborhood has almost everything I want and is much larger, but which makes the most sense as an investment?
If your goal is to buy a home for it’s resale value and the one you are thinking of buying in the older neighborhood is at the upper end of values for that neighborhood, then it may not be the wisest choice. If it is similar or lower in price to the others, then there should be no problem, because pricing should be considered in relation to the local neighborhood and not compared to homes in other neighborhoods (for the most part)
Plus, is it a neighborhood on the decline, or are others going to be fixing things up, too, so that it is a neighborhood that is improving? It could turn out to be a very good deal as long as you don’t “overpay” because of the recent improvements.
Remember that you also buy a home for it’s value to you as a “home,” and that is something else you should consider. Which neighborhood would you AND your family feel most comfortable in?
I have a family friend who is a Realtor. I like her and she is a help but she gives me one price to sell my home for and I think it is too low. So I called another agent who suggested a price more in line with my expectations. Who do I choose?
You might want to consult a couple more Realtors on the market value of your home. Most of the estimates should be in the same ballpark.
It could be that your friend is being more honest with you about the value of your home and the other Realtor gave you a higher number because he already knew you expected it. This is called “Buying a Listing” and is the subject of an article on our web site.
Or it could simply be that your friend is a good friend, but not that great of a real estate agent.
Mixing business and friendships is always risky to the friendship. On the other hand, if your friend is truly competent and was providing wise advice, she may be offended if you ignore the advice and choose another agent.
Why should I use a real estate salesperson?
A real estate salesperson is more than just a “sales person.” They act on your behalf as your agent, providing you with advice and guidance and doing a job – helping you buy or sell a home. While it is true they get paid for what they do, so do other professions that provide advice, guidance, and have a service to sell –such as Certified Public Accountants and Attorneys
The Internet has opened up a world of information that wasn’t previously available to homebuyers and seller. The data on listings available for sale is almost current – but not quite. There are times when you need the most current information about what has sold or is for sale, and the only way to get that is with an agent.
If you’re selling a home, you gain access to the most buyers by being listed in the Multiple Listing Service. Only a licensed real estate agent who is a member of your local MLS can get you listed there – which then gets you automatically listed on some of the major real estate web sites. If you’re buying or selling a home, the MLS is your agent’s best tool.
However, the role of an agent has changed in the last couple of years. In the past, agents were the only way home buyers and sellers could access information. Now agents are evolving. Because today’s home buyers and sellers are so much better informed than in the past, expertise and ability are becoming more important.
The real estate agent is becoming more of a “guide” than a “salesperson” — your personal representative in buying or selling a home.
What is the difference between a real estate agent and a real estate broker?
Most states require real estate sales professionals to be licensed by the state, so that they can control education and experience requirements and have a central authority to resolve consumer problems.
The terminology used to identify real estate professionals varies a little from state to state. Brokers are generally required to have more education and experience than real estate salespersons or agents.
The person you normally deal with is a real estate agent or salesperson. The salesperson is licensed by the state, but must work for a broker. All listings are placed in the broker’s name, not the salesperson’s.
A broker can deal directly with home buyers and sellers, or can have a staff of salespersons or agents working for him or her.
RBI – FAQ’s
Who is a NRI ?
A NRI is a person resident outside India who is either a citizen of India or a person of Indian origin. A NRI is an Indian Citizen who has migrated to another Country. For all official purpose the Government of India considers Indian National away from India for more than 182 days, in a year.
Who is a PIO?
A person of Indian origin means an individual (not being a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan) who:
i) held an Indian Passport at any time, or
ii) who or whose father or paternal grand father was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955.
What are the types of Property can a NRI/PIO purchase in India?
There are no restrictions on the numbers of Residential/Commercial Properties (other than agricultural land/farm house/plantation) that can be purchased.
Do NRI/PIO require permission of The Reserve Bank to acquire residential/ commercial property in India?
No. All Indian citizens are entitled to buy property in India, irrespective of their residential status.
How should the purchase of residential immovable property be paid for by NRI/ PIO under the general permission?
The purchase consideration should be met either out of inward remittance in foreign exchange through normal banking channels, or out of funds from NRE/FCNR(B)/NRO accounts maintained with banks in India.
Does a NRI/PIO, requires to have a company in India or abroad or both for purchasing of property?
No
Can NRI/ PIO’s acquire or dispose residential property by way of gift?
Yes, NRIs and PIOs can freely acquire immovable property in India by way of gift either from
(i) person resident in India
(ii) NRI
(iii) PIO
However the property can only be commercial or residential.
Again NRIs and PIOs may gift residential/ commercial property to
(i) person resident in India
(ii) NRI
(iii) PIO
(iv) Foreign national of non Indian origin – with approval of RBI
Is there are any Lock in period for such investment?
Currently there is no lock in period.
Can NRI/PIO sell their purchased property without the permission of Reserve Bank?
Yes. Reserve Bank of India has granted general permission for sale of such property to the following categories:-
-To a NRI
-To a PIO (If the seller is a PIO, then a prior approval is required from RBI)
-To a person Resident of India
Can the sale proceeds of such property (if and when sold) be remitted/repatriated out of India?
Yes the sale proceeds can be remitted/repatriated out of India
In the event property acquired out of foreign exchange source i.e. remittance through normal banking channels/ debit to NRE/ FCNR(B) accounts, the amounts to be repatriated should not exceed the amount paid for such property from such source. However, repatriation of sale proceeds purchased out of foreign exchange is restricted to not more that two residential properties, in a block of one year, with a facility of crediting the Capital gain to the NRO account.
Again in the event the property was acquired out of Rupee source, an amount not exceeding USD one million, per financial year, subject to tax compliance, out of balance held in NRO account, may be remitted/repatriated.
In case of repatriation is there any tax liability to the Indian Government?
Yes, during repatriation Capital Gains (Long Term/Short Term) as applicable will be attracted.
Long Term Capital Gains: For properties held for 36 months or more are termed as
Long Term Capital Assets, and currently attracts a rate of 22.6%
(Fin. Year: 2007-08)
Short Term Capital Gains: For properties held for less than 36 months are termed as
Short Term Capital Assets, and currently attracts a rate of 33.9%
Can rental Income be repatriated?
Repatriation of income derived out of letting of immovable property is permissible. NRI/PIO can rent out the property without approval of Reserve Bank. Rent received can be credited to NRO/NRE account or remitted abroad. Powers have been delegated to the Authorised Dealers to allow repatriation of current income like rent, interest, dividend etc. of NRI/PIO who do not maintain an NRO account in based on an appropriate certification by Chartered Accountant, certifying that the amount proposed to be remitted is eligible for remittance and that applicable taxes have been paid/ provided for.
Types of Power of Attorneys?
- To Sell – Power of attorney to sell a property
- To Recover Debt – To recover property related loans/debts.
- Power of Attorney by a firm
- Power of Attorney by trustee
- GPA (General Power of Attorney) to a manager of the estate
- Specifica Power of Attorney by the Owner to the Builder to get Building Plans Sanctioned, Clear Dues….Get Permissions etc
What could be the additional formalities/complications for holding properties under company ownership?
In the event of any income from the property, Income Tax liable is more than what an individual is supposed to pay. Taxes and all charges are administered as per the Corporate Tax laws.
How do registry charges vary for family and/or women?
In the event of registry done in the name of a female, the applicable charge is equivalent to 5% of circle rate value. 6% of circle rate value in case of combined (male & female) and 7% for individual (male) and/or corporate registry.
What is the advantage of holding a property under the ownership of a company rather than an individual?
The advantage is that the property can be transferred along with the company without any payment duty or securing any Income Tax Clearance Certificate under 34-A and 37-I.
How can a lease agreement be created?
1. Registered lease agreement in cases where the lease is from year to year or exceeding one year rent or reserving yearly rent. In such cases the instrument must be executed by both the lessor and the lessee.
2. Oral agreement followed by delivery of possession in other cases.
If a lease agreement does not contain an escalation clause, can the lease amount still be escalated upon renewal?
There is a provision in the Rent Control Act that entitles the lessor to an escalation of minimum 10% on previous amount after every 3 years. The escalation percentage may vary subject to lease agreement and terms agreed upon mutually between lessor and lessee.
What is a lease?
Lease is a legal binding contract between the lessor and the lessee for possession and enjoyment of the profits of land/flat/shop on one side and recompense by rent or other consideration on another.
Can corporate firms/houses utilize residential areas for commercial purposes?
The practice of opening offices in residential areas is illegal and punishable. However, in the usual course of business, service based industries are allowed to open their offices in such residential colonies and normally utilize (to the tune of) 25% of ground floor area. But any complaint by owner/residents/RWA is held material for them to vacate the premises.
What is the best way to select the cheapest home loan ?
Keep the loan period constant and calculate the total amount paid for the home through the different loan options available.
What is the home loan amount generally granted by financial institutions ?
The amount of home loans granted by various financial institutions generally is between 2 lakhs to 15 crores and between 70% to 100% (under special schemes) of the purchase price.
What is an EMI ?
EMI – Equated Monthly Installments, is the amount payable to the Housing Finance Institution every month, till the loan is paid back in full, comprising of portion of interest and principal. EMI is to be paid every month through post dated cheques or through direct deductions from the salary.
What are the other costs in Home Loans?
- Pre-payment Penalties: When a loan is paid back before the end of the agreed duration, a penalty is charged by some banks/companies, which is usually between 1% and 2% of the amount being pre-paid.
- Commitment Fees: Some institutions levy a commitment fee in case the loan is not availed of within a stipulated period of time after it is processed and sanctioned.
- Miscellaneous Costs: It is quite possible that some lenders may levy a documentation or consultant charges.
- Registration of mortgage deed.
What is the security required against the home loan ?
The main security for a home loan is the first mortgage of the property to be financed, normally by way of deposit of title deeds and /or such other collateral security as may be necessary. In addition interim security may be required, if the property is under construction. The documents of title will be kept in the safe custody of the Home Finance Companies until repayment of the loan.
What is the difference between monthly rest and annual rest?
Monthly Rest : the interest is calculated on the outstanding principal loan at the beginning of every month.
Annual Rest : the interest is calculated on the outstanding principal loan at the beginning of every year.
What are the types of loans available depending on the interest charged?
- Fixed rate: where the rate of interest charged by the HFC on the loan is constant over the tenure of the loan.
- Variable rate : Commonly known as Floating Rate, where the rate of interest charged by the Home Finance Companies on the loan keeps changing with respect to the rates in the market over the tenure of the loan.
What Is Leasehold Property ?
Leasehold Property is property leased to a lessee for a stipulated period. The Lessee pays lease premium and annual lease amount as fixed and mutually agreed by the Lessor and lessee. The land ownership rights remain with the Lessor and a prior sale-permission is normally required if you plan to transfer the property.
What is meant by valuation of property?
The valuation process evaluates the market value of the property. Demand and supply forces operating in the market, as well as other factors like type of property, quality of construction, its location, the local infrastructure available, maintenance, are all taken into consideration before the market value is decided.
What is the difference between carpet area, built-up and super built-up area?
The area of an apartment or building, not inclusive of the area of the walls is known as carpet area. This is the area that is actually used and in which a carpet can be laid. When the area of the walls including the balcony is calculated along with the carpet area, it is known as built-up area. The built-up area along with the area under common spaces like lobby, lifts, stairs, garden and swimming pool is called super built-up area.
What constitutes conclusion of sale of a property?
An agreement of sale, coupled with actual possession of the property would be considered as a conclusion of the sale. Usually, the entire amount is paid at the time of handing over possession.
Are there any income tax considerations while transferring newly acquired property?
If the transfer takes place within three years of purchase, the income tax exemption under Section 54F of the Income Tax Act does not hold good.
What does the term ‘Freehold Property’ mean?
When ownership rights for a piece of property are given to the purchaser for a price, that property is referred to as Freehold Property. Unlike in the case of leasehold property, no annual lease charges need to be paid and the freehold property can be registered and/or transferred in parts.
What does the term ‘Leasehold Property’ mean?
When a piece of property is given or ‘leased’ to an individual (known as the ‘Lessee’) for a stipulated period of time, by the owner of the property (known as the ‘Lessor’), the property is referred to as Leasehold Property. A certain amount is fixed by the Lessor to be paid as lease premium and annual lease. The land ownership rights remain with the Lessor. Transfer of property requires prior permission.
What is the meaning of property’s market Value? How is stamp duty decided?
The price that a property can command in the open market is known as its market value. Stamp duty is based on the market value or the agreement value of the property, whichever is greater.
What are the misuse charges for putting the property to use other than what is permissible under the lease conditions?
As per terms and conditions of lease deed the lessee is not supposed to use the premises other than specified in the lease deed without the prior permission of the lessor. As and when a breach of misuse of the premises is noted a show-cause notice is sent to the lessee asking him to remove the breach within 30 days from the date of notice. The period can be extended to 60 days if the lessee gives cogent reasons. The process of re-entry (determination of lease deed) is initiated if the lessee neither remove the breach nor send any communication. However, on receipt of intimation from the allottee indicating the specific date of removal of breach the premises is inspected again and the charges for the breach are being recovered in the name of misuse charges. The formula for calculation of charges for the misuse of the property has been approved by the M.O.U.D.
| Misuse Area | Present Market | Rates charged | Size of plot X 13.9 X Period/100 |
| Permissible covered area (p.sq.m) |
Rate (p.sq.m) |
on allotment (p.sq.m) |
The market rates for various colonies likely to be adopted in the above formula are being finalized by the Land costing Wing for each year.
A decision to charge interest @ 12.5% p.a. if the delay is 30 days or less and @ 15% per annum for the period exceeding 30 days has been taken if the payment of misuse charges is not received within 30 days from the date of issue of demand letter of misuse charges.
What is unearned increase in case of transfer of lease property outside blood relation and formation of new company?
The allottees of Residential, Commercial/Industrial who sell/transfer their lease property outside the blood relation for which lessor’s permission is required which is being given subject to charging of 50% Unearned Increase in the market value of the plot as per lease deed terms. In the following cases the unearned increase is not being attracted :
- Conversion of partnership firm into a private limited firm comprising original partners as Directors.
- Change from Pvt. Ltd. Co. to Public Ltd. Co.
- In case of addition, deletion or substitution of partners in a firm or directors and conversion of sole proprietorship firm or partnership concern into private limited company when change in constitution is intimated, for approval by the DDA, within one year from the date of purchase of plot in auction. This will not apply in case of plot obtained by the party by way of allotment.
The cases in which unearned increase is being charged are as under :
- Addition of outsider not falling within the family members.
- Substitution of the original allottee/auction purchaser.
- 50% unearned increase is charged in respect of proportionate share of the plot parting with by way of addition, deletion or substitution of partner.
- In the cases where a private limited company/public limited company separately floats a separate new company although directors may be the same.
The interest @ prevailing at the time of application on the unearned increase is charged from the date of receipt of application till the payment made by the allottee/company.
Source : DDA Website
Can i opt for Installment Payment Option or Cash Down Payment Option ?
No option, however if a flat is alloted on hire purchase then in the request of the allotee, mode of payment can be changed to cash down basis.
Source : DDA Website
How to get a flat in the choice of locality or floor?
Choice of locality in new schemes is offered but floor choice or allotment in a particular Sector/Pkt is not allowed as the allotment of the specific flat is made through computerized draw. G.F, flats are allotted under reserve quota to P.H. category registrants under 1% reserve quota. No lacality choice in the registration under NPRS-79, AAY-89 & JHRS-96.
How to get allotment of a DDA Flat?
DDA constructs residential flats under various categories , Higher Income Group Middle Income Group, Lower Income Group and Janta etc., As soon as the flats under any project are completed, flats are offered for allotment to the applicants who are already registered under its various Housing Registration Schemes under the categories of LIG & Janta etc.. Under HIG & MIG category, as soon as the flats are made available, applications from prospective buyers are invited through a public notice( appearing in the leading newspapers in English and Hindi both) for registration along with the registration money. The priced brochure containing the terms & conditions and the eligibility criteria is also put on sale through DDA sale counter at Vikas Sadan, INA and through the designated banks. Allotment of the flats are made through a computerized draw on scrutiny of the applications as per the eligibility criteria and the terms & conditions.
