Adat Land Unregistered land not covered by the Basic Agrarian Law of Indonesia
Agent –An Agent or Licensee is the person whom will serve as your real estate professional, helping you with the sale or purchase of your home or property. Click here to search for a licensee.
Appraised Value –Appraised Value is the value that the appraiser determines that a property is valued at given its condition, size, location market value and other factors. This is the number your lender will likely use when determining how much they will lend for a given property.
Appraiser –An appraiser is an individual who is trained and experienced in assessing and assigning an unbiased fair market value to a property. The fair market value will be used by your lender to ensure that the home being purchased has sufficient value to support your loan. Click here for a list of Appraisers.
ARM –Adjustable Rate Mortgage is a mortgage in which the interest rate is subject to change multiple times over the course of the loan. As the rate changes, your monthly payments will also change up or down.
As-Is –"As-Is" means that the seller is offering the home in its current condition and has generally stated that any defects known or un-known to them will not be fixed as a condition of the sale.
Asking Price –Asking price also known as the list price. This is the price you will typically see in the home’s advertisements. The price is generally established by the seller with the help of their real estate professional and will be based on other similar homes and numerous market factors, including recent sales, available financing, condition of the home, and many more.
Backup Offer –The term backup offer refers to an offer submitted by a potential home buyer to a seller with the understanding that the seller has already accepted an offer from someone else. If the first offer doesn’t go forward for some reason, then the backup offer would be considered. If a home is especially desirable it may be that there is more than one backup offer from buyers interested in the home.
Bill of Sale –A written agreement in which certain mutually agreed upon items of "Personal Property" are transferred from the seller to the buyer.
Broker –The individual who runs a real estate company. In order to work as a broker in Indonesia, an individual must have a certain level of experience, pass the state brokers exam, additionally brokers must take continual professional development education in order to maintain their broker’s license and practice real estate in the state.
Brokerage –The term Brokerage refers to the Real Estate Company or brand, for instance ABC Realty Inc. A Brokerage is managed by the Broker and generally has a number of Licensees (agents) working to serve its customers, but in many small Brokerages the Broker may be the only individual, in that case you would work directly with them.
Closing –The term "Closing" refers to the signing of the final documents that officially transfer ownership of the home from the seller to the buyer. If you have never purchased a home before or if it has been a while since you have, it is likely you will be surprised by the vast amount of paperwork you will be expected to review and sign.
Closing Costs –In addition to your down payment there are a number of other costs associated with the purchase of and transfer of ownership of a property. Your real estate agent will be able to help ensure that the costs are correct as well as explain them to you.
Commission –The most common model in which real estate licensees and brokers are compensated for their expertise and time is through a commission, or a percent of the sales price. Typically this is paid for by the home seller and then split by arrangement between the real estate brokers/licensees so that each is paid for their respective work.
Competitive Market Analysis (CMA) –This is a tool that your real broker/licensee will produce for you when you are looking to list your home for sale to help establish the best price to offer and market your home. Because your real estate professional has access to all of the data in the Indonesia MLS data base, including previously sold information, property history, sellers concessions and other critical information they will be able to interpret and produce a CMA specific to your home and help you determine its worth.
Contingency –You will hear the word contingency when entering into a contract sometimes. A common contingency would be that the offer to purchase the home is "contingent" on the home appraising for a certain amount.
Contract –When you hear the word contract, in most instances this will refer to the agreement between the seller and buyer to sell/buy the home, also called the "Purchase and Sale agreement." This document will include all of the terms the two parties have agreed
upon, including the price, time lines, contingencies, etc.
Down Payment –The down payment is the money that you will put down from your savings or other sources towards the purchase of your new home. Minimum down payment requirements are different from lender to lender so you will want to research the options that best meet your needs and resources. Click here to see a list of lenders or ask your real estate professional to help guide you to a reliable source.
Due Diligence –The time period after the acceptance of an offer when the buyer thoroughly investigates the property to determine whether they remain satisfied with the property before finalizing the purchase. Essentially it means doing your homework for the property before actually making the purchase.
Earnest Money –A sum of money given by the buyer, and held in a trust account by the broker, as a good faith commitment to honor the contract to purchase the home. At the time of closing this money will be credited towards your down payment and other closing costs.
FSBO –FSBO is an acronym standing for "For Sale By Owner." This term can be confusing as it is often misused. A true for-sale-by-owner property will not be listed in Indonesia MLS and won’t show up on this or the vast majority of other web sites. As such these sellers miss out on the exposure and marketing that can only be obtained by using a real estate professional, and most buyers and their agents won’t be likely to find these properties offered for sale. This can be a great disadvantage to selling a property in a reasonable time frame and for its greatest possible confusion can occur about value when you see some brokerages offering limited services to sellers and using the term FSBO or other similar language. These companies if they are members of Indonesia MLS will have access to input your home into the active data base, and thus onto the web. In many cases they offer little other assistance or guidance and may not be right for you. Be certain that you research thoroughly and think about interviewing several real estate professionals to determine the best fit for you and your needs.
Hak Pakai It is a renewable use right. In July 1996, Government Regulation No’s. 40 and 41 (GR 40/96 and GR41/96) were passed, allowing resident foreigners to hold Rights of Exclusive Use (Hak Pakai) over Indonesian real property. This is not freehold ownership.
Hak Sewa Leasehold title avaialbe to both locals and foreigners
Hak Guna Bangunan The rights given to a registered company, including PMAs, to use and develop land for commercial purposes
Home Inspection –It is considered a good idea to hire a Home Inspection company to thoroughly inspect a home you have entered into contract on to identify any maintenance and repair issues that you may wish to address prior to purchasing the home.
Interest Rate –Expressed in a percentage value, the interest rate is the basis that the bank will charge you for borrowing the money to purchase your home. The better your credit worthiness the lower the rate of interest you will likely receive.
Joglo A type of traditional vernacular house of the Javanese people (Javanese omah). The word joglo refers to the shape of the roof.
Licensee –This is a direct reference to how real estate licenses are issued in Indonesia.. A Licensee is the person whom will serve as your real estate professional, helping you with the sale or purchase or your home or property. A licensee is commonly referred to as an Agent. Click here to search for a licensee.
Licensee –This is a direct reference to how real estate licenses are issued in Indonesia.. A Licensee is the person whom will serve as your real estate professional, helping you with the sale or purchase or your home or property. A licensee is commonly referred to as an Agent. Click here to search for a licensee.
Mortgage –Commonly used to refer to the loan that a buyer has to purchase a home.
Negative investment act. Covers industries that are protected for Indonesians national security eg gas oil mining etc or local business opportunities including bars and restaurants
Offer –Offer refers to the amount that the interested home buyer "offers" to the seller for the purchase of a property offered for sale. The offer will be written up and formally by your licensee/broker and presented to the seller’s licensee/broker for consideration.
PMA Foreigners can also form a Penanaman Model Asing Company, which is a 'status of doing business' in Indonesia. To set up a PMA, foreigners must submit a business plan, operate a business that adds value to Indonesia in terms of skills, employment, and the environment, make a cash deposit to an Indonesian bank, and show that the property investment is an asset of the company. PMAs can not be established for the sole purpose of owning a landed property, and can only hold land under 'hak guna bangunan' title - or conditional corporate ownership title. Establishing a PMA can take three or four months, and costs around A$7,000. PMAs can operate for 30 years once established, and a 30-year extension can be granted. PMAs can be 100% controlled by foreigners.
PTPMA Private Limited Foreign Equity Basically an Indonesian foreign owned entity. Foreigner can set up an Indonesian investment vehicle and appoint an advisor, expats can be directors, shareholders and came have work and stay permit with this vehicle for shareholders and directors.
Pondok Wisata A Pondok Wisata is a license to rent out a small property or homestay. It is issued to the owner of the property and is only available to Indonesian citizens.
Personal Property –When buying or selling a home, there are items within the home that may or may not be included and transferred with the sale. These items can often lead to a dispute between the buyer and seller and can lead to aggravation to both parties. Typically items not permanently attached to the home are considered personal property and a separate "Bill of Sale" would be used to convey or transfer ownership from seller to buyer for selected items. Items that might be on a bill of sale could include; drapes, washer/dryer, hot tub, etc. Having an experienced real estate professional working for you will help to ensure that both parties are clear about what items will be transferred and at what compensation.
PITI –PITI stands for "Principal, Interest, Taxes and Insurance" These four items will make up your monthly mortgage payment. Principal refers to the amount of the loan that you are paying off each month. Interest refers to the portion of your monthly payment that will pay to the bank for the privilege of them loaning you the money to purchase your home. Most home loans are 15 to 30 years in length and are structured in such a way that you will pay a greater portion to interest than principal in the early years. Taxes is the amount that you will be paying to your local municipality and lastly Insurance will pay for hazard insurance as well as "PMI" commonly known as mortgage if your loan requires it.
PMI –Private Mortgage Insurance is typically added to loans where the home buyer has less than 20% down payment. This payment will be included in your monthly mortgage payments made to your bank – see PITI.
Points –This can be a confusing term and is best explained by your real estate professionals. The most basic definition is that a "point" is a dollar amount equal to 1% of your loan. Lenders may charge points for processing your loan and may offer you a lower interest rate if you pay points to them up front.
Prequalified –Before you begin your home search in earnest you will want to meet with a lender(s) and get "prequalified" What this means is that your lender will have you fill out an application and then assess your income, credit score, and other financial information and advise you on how much of a mortgage you will be able to obtain from the bank and thus how much you will be able to pay for a home.
Principal –The portion of your monthly Mortgage payment that is applied to the balance of your loan.
Property Tax –Part of home ownership is paying your local municipality an annual tax payment based upon the assessed value of the property. Usually tax payments are made to the government once or twice a year, but you will pay an equal amount each month so that the money is in place to make the payments as they come due.
Sertifikat Hak Milik (SHM) A freehold certificate of ownership available to Indonesians
Title –Title refers to the right to ownership of a piece of property.
Title Insurance –Title Insurance will be one of the costs you will pay at Closing. This insurance is to protect the buyer from any issues that may come up with the title. Issues that might arise could be a lien of claim against the home. As an example, this could happen as a result of a contractor doing work on the home and then not getting paid. The contractor might then put a lien on the home so at the time of sale, they would get paid from the home sellers proceeds. As a buyer, you wouldn’t want to take on that obligation.
Units of Measurement: The Metric system was adopted in 1923 and has been compulsory in Indonesia since 1938. Prior to this the following units were used to measure area:
One are is equal to 100m²
100 Are is equal to 1 Hectare
Underwriting –The process of underwriting refers to the evaluation of the potential home buyer or borrower. The Underwriter will review the borrowers credit, income, and other financial factors and make a determination about how much of a loan you will qualify for, ultimately your bank will rely on this assessment in qualifying you for your mortgage.
Walk Through –A final inspection that the buyer will do just prior to closing at which time the buyer will verify that no damage was done during the sellers move out. In the event that damage did occur, it can be addressed with each parties real estate licensees/brokers to resolve the issue.
Warranty Deed –This will be issued after the title search and guarantees the title to the property is clear from any liens or other issues.