New Rona Real Estate Glossary: Top Common Terms in the R.E.

Will explore the Real Estate Glossary to understand the Real Estate Market.

This Real Estate Glossary will help you when entering the real estate market, as it can be daunting, especially with the large amount of industry jargon that often complicates communication.

To empower you and clarify the process, we’ve crafted an essential Real Estate Glossary of common real estate terms. Whether you’re a first-time homebuyer, seasoned investor, or simply eager to learn more, this guide will equip you with the knowledge you need to navigate the real estate landscape confidently and effectively.

1. Buyer’s Agent

A licensed real estate expert who works on behalf of the buyer, helping them find the right property, negotiate terms, and close the deal.

2. Listing Agent

A real estate professional representing the seller. Their role involves marketing the property, arranging showings, and negotiating offers.

3. Appraisal

An independent evaluation of a property’s value by a certified appraiser, often required by lenders before approving a mortgage.

4. Closing Costs

The additional fees and expenses that buyers and sellers pay during a transaction, such as loan origination fees, title insurance, and escrow fees.

5. Escrow

A neutral third party holds funds or documents until both the buyer and seller fulfill their obligations to finalize the deal.

6. Down Payment

The upfront payment made by a buyer toward the property’s purchase price, typically expressed as a percentage of the total cost (e.g., 20%).

7. Mortgage

A loan provided by a financial institution to help a buyer purchase a property, with the property itself serving as collateral.

8. Equity

The difference between a property’s current market value and the remaining balance on any loans secured against it.

9. Title

A legal document that establishes ownership of a property. Verifying a clear title is essential before purchasing a home.

10. Deed

A legal document transferring ownership of a property from one party to another.

11. Foreclosure

A legal process where a lender takes ownership of a property if the borrower fails to make mortgage payments.

12. HOA (Homeowners Association)

An organization in a planned community or condominium that sets rules and collects fees for maintaining shared spaces and amenities.

13. Inspection

A professional assessment of a property’s condition, often conducted before finalizing a sale, to identify any potential issues or necessary repairs.

14. Contingency

A condition included in a real estate contract that must be met for the transaction to proceed, such as financing, inspection, or appraisal requirements.

15. Pre-Approval

A preliminary review by a lender to determine how much a buyer can borrow based on their financial situation.

16. Zoning

Regulations that define how a property can be used, such as for residential, commercial, or industrial purposes.

17. Leasehold vs. Freehold

• Leasehold: Ownership of the property for a set period, while the land belongs to someone else.
• Freehold: Full ownership of both the property and the land it’s on.

18. ROI (Return on Investment)

A calculation of the profitability of an investment property, expressed as the percentage of profit earned relative to the cost.

19. MLS (Multiple Listing Service)

A shared database used by real estate professionals to list and access property information.

20. Capital Gains Tax

A tax on the profit earned from selling a property.

Why Understanding Real Estate Glossary Matters

Whether you’re buying, selling, or investing, knowing the Real Estate Glossary empowers you to make informed decisions, communicate effectively, and navigate the real estate process with confidence.

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Most of the terms in the glossary are applicable to real estate transactions in the Philippines, but there are a few specific differences and nuances in the Philippine real estate market that are worth noting. Here’s a breakdown:

Key Differences and Philippine-Specific Terms in Real Estate Glossary:

1. Title and Land Ownership Laws
   • In the Philippines, land ownership is restricted to Filipino citizens and corporations with at least 60% Filipino ownership. Foreigners can own condominiums but not land.
   • Titles in the Philippines are issued by the Registry of Deeds and are categorized into types like Transfer Certificate of Title (TCT) for land and Condominium Certificate of Title (CCT) for condos.
2. Capital Gains Tax (CGT)
   • In the Philippines, the seller typically pays the capital gains tax, which is 6% of the selling price or zonal value, whichever is higher.
3. Zoning in the Philippines
   • Zoning laws are implemented by local government units (LGUs). These dictate whether a property can be used for residential, commercial, industrial, or mixed-use purposes.
4. Homeowners’ Association (HOA)
   • HOAs in the Philippines are prevalent in subdivisions and condominiums. They manage the maintenance of shared areas, security, and community events. Fees vary depending on the location and amenities.
5. Real Property Tax (RPT)
   • This is an annual tax levied by the local government on property owners based on the assessed value of the property.
6. Pag-IBIG Housing Loans
   • Pag-IBIG is a government program that offers affordable housing loans to Filipino citizens and Overseas Filipino Workers (OFWs). This is a popular financing option in the Philippines.
7. Reservation Fees
   • When purchasing pre-selling properties (e.g., condos under construction), buyers typically pay a reservation fee to secure their unit. This fee is deducted from the total contract price.
8. Pre-Selling Properties
   • A common practice in the Philippines where developers sell units that are still under construction. These properties are often cheaper but involve risks related to delays or non-completion.
9. Condominium Laws
   • The Condominium Act of the Philippines (RA 4726) governs condominium ownership. Foreigners can own up to 40% of the units in a condominium project.
10. Documentary Stamp Tax (DST)
    • A 1.5% tax on the property’s selling price, zonal value, or fair market value, whichever is highest.
11. Notarial Fees
    • Documents such as the Deed of Sale need to be notarized, and notarial fees are part of the closing costs in the Philippines.

Additional Notes for the Philippine Market:

• Developers’ Terms: Major developers like Ayala Land, SMDC, and Megaworld often offer flexible payment schemes for pre-selling projects, such as “no down payment” or staggered payments.
• Property Listings: Many properties are listed on local platforms like Lamudi, Property24, and Facebook Marketplace, rather than using a centralized MLS system.
• OFW Buyers: Overseas Filipino Workers (OFWs) are a significant market segment, and many developers and banks have tailored programs to accommodate their needs.