Some jargon is used daily in real estate, as in any other field. Those who work in this field are already used to them and know what they mean. But shouldn't those who don't work in real estate understand what each term means? The answer is: yes! Whether you are buying or selling your home, it is important to be informed about all the steps, and there is nothing better than learning some of the meanings behind some real estate terms. Read this article to learn some of the real estate jargon that will come in handy when buying or selling a home.

Photo by Christina Wocintechchat - Unsplash

In the documents of a property, you can find several ways of designating the area of a property. There are at least four terms for the actual area of your home that can be found in the documents, floor plan, or property advertisement. The different areas differ and can be complicated for those not in the real estate industry, but knowing the definitions of each area will help you make an informed purchase. Learn the meaning of each area.

According to the General Regulation of Urban Buildings (GRUB):

1. Usable area

The usable or private area of a house is the sum of the area of all rooms in the property, including vestibules, internal circulation routes, sanitary facilities, storerooms and other similar rooms, and closets. The measurement is made according to the internal perimeter of the walls, subtracting loads up to 30 centimetres, internal walls, partitions and pipes.

2. Gross area

This is the total surface area of the building or apartment, measured on the outer perimeter of the walls and the axes of the walls separating the dwellings. The gross area includes private balconies, adjoining rooms, basements and private attics. This measurement, therefore, includes the total area of the property but excludes attics that do not have a regular ceiling height for residential purposes or basements for condominiums use.

The Municipal Property Tax Code (CIMI), on the other hand, states:

3. Gross private area

The total area is measured by the outer perimeter, wall axes, and dividing elements between the dwellings. This area also includes enclosed balconies, basements and private attics that have an identical use to the dwelling or building. This area, therefore, corresponds to the gross area, with the difference that open balconies, garages, parking spaces, storage rooms, terraces, courtyards and garden areas are not included.

4. Gross dependent area

Reflects the owner's exclusive use of covered or enclosed space. This area also includes common areas or areas outside the building or dwelling whose use is complementary to the dwelling. This includes attics, accessible basements, balconies (which do not count towards the gross private area), garages, parking spaces, technical rooms, or machine rooms. Everything that is not part of the private gross area is included in the dependent gross area. The information about the dependent gross area is important for the calculation of the Property Transfer Tax (IMT - Imposto sobre Transmissões Onerosas), the Municipal Property Tax (IMI - Imposto Municipal sobre Imóveis) or the Additional Municipal Property Tax (AIMI - Adicional do Imposto Municipal sobre Imóveis) and also the stamp duty.

5. Gross Construction Area

This area is equal to the sum of the dependent gross area and the private gross area.

Additional information:

• Now that you have read the definitions of each property area, you can make an informed decision about the house you want to buy. The same goes for anyone who wishes to sell their property. So, you can speed up the process by giving the correct information to potential buyers. If sales advertisements state the price per square metre, you should always ask what area it refers to calculate the exact value of the property.
• The Portuguese property market employs three distinct area concepts. The terms for two of these concepts, the GRUB and the CIMI, can be found in the descriptions above. The Regulatory Decree 5/2019 is the third concept. These three concepts have not been put together in a way that would make real estate documents in Portugal and other places easy to understand.

Photo by Eskay Lim – Unsplash

6. Horizontal property

Article 1414⁰ of the Civil Code states that the parts that make up a building to form independent units may belong to different owners under the horizontal property regime. It is a horizontal property if you live in a building with several apartments, each with a different owner. Each dwelling (apartment) is autonomous and registered independently of the others, despite being part of a unified structure with common areas accessible to all owners, such as the staircase or the entrance patio.

7. Vertical property

The vertical property regime does not differ significantly from the horizontal property regime. The difference is that all dwellings belong to the same owner. If the owner decides to sell, he/she must do so in its entirety as one unit or plot.

While this is the premise of the vertical property regime, it can be changed if the owner acquires the constitutive title of the property and determines which dwellings will become autonomous and receive their legal individuality.

Additional information:

• The horizontal property's constitutive title is a document that defines the dwellings and indicates the destination of each fraction (residential, commercial, etc.). The building's common areas are also listed. The notarial deed states the value of each dwelling as a percentage or per mille of the total building value. The horizontal property's constitutive title can be amended, which means that if all owners agree, the composition and value of each fraction can be modified.

Photo by Sean Pollock – Unsplash

8. Real estate valuation

What exactly is a real estate valuation?

It is a personal inspection of the property to determine its monetary value. During the visit, the property's condition is assessed, measurements are taken, and photographs are taken.

Who performs the real estate valuation?

A certified professional with academic training who is recognized by the Securities Market Commission (CMVM) performs the real estate valuation. The appraiser's or real estate expert's work results in a document known as a Real estate valuation.

What is taken into account for the Real Estate Valuation document?

The most important criterion is always the property location, but there are other criteria that real estate appraisers include in the property valuation document. For example, the year of construction of the property influences the appraised value. Older houses are usually worth less than newer ones. Still, there are exceptions, such as if the house appears to have been well maintained over the years, or if it is well maintained because it has recently been renovated.

The construction quality and accessibility (stairs, lifts, ramps) are also evaluated.

The property's typology and areas are also considered in the calculation. A two-bedroom house, for example, is usually worth more than a one-bedroom house, but if the one-bedroom house has a larger area, it will have a higher final value.

Another criterion that is valued is sunlight. The house will be rated higher if it receives adequate sunlight.

This document also takes into account amenities such as a swimming pool, garage, green areas, and even the view from the property.

Another factor influencing the document's final value is supply and demand. When certain areas are in high demand, the value per square metre rises.

When is a real estate valuation required?

A real estate valuation is usually carried out when a transaction is pending for a property, land or commercial property.

• The bank itself requires an independent valuation when you apply for a mortgage to buy or build a property. A new valuation is also required when transferring a loan to another bank.

• When a revision of the rateable value of properties (VPT) is requested, i.e., for tax reasons that serve as the basis for taxes such as IMI or IMT.

• Asset valuations are also requested in the case of inheritances.

How much can a real estate valuation cost?

The value of the real estate valuation depends on the location and type of property. If requested individually, it can range between 120 and 300 euros for a two-bedroom apartment, but if it is a mortgage, it is requested by the bank. The future owner always pays the amount in the form of a bank commission. This fee is about 230 euros.

Photo by Priscilla Du Preez – Unsplash

Real estate can be a complicated and unfamiliar terrain, but with the knowledge of the right real estate terms, you can get better deals. If you choose to work with a professional in this field, they will explain the entire process to you and make decisions with your end goal in mind.