Ready reckoner rate works like a benchmark in real estate to sell or purchase the property. In short, it is known as the circle rate. The ready reckoner rate is the lowest rate of property in a particular area that is defined by government authority.
This factor is decided on the property size, location, and specifications. Read this post to know about the ready reckoner rate and its calculation way.
Importance of Ready Reckoner Rate for a Homebuyer
The ready reckoner rate is one of the crucial factors that give you rough property value if you want to sell it at market rate. It helps to calculate the government tax and understand the true market value of the property. If the difference between market rates and ready reckoner rate is less, then it is a favorable term for buyers to buy property in the area.
Calculation of Ready Reckoner Rate
How to calculate the ready reckoner rate? The ready reckoner rate is a common method to calculate the rough value of property in a specific area. You can start by calculating the built-up area of the property and take the important elements of the property into account, like amenities, floors, area, construction age, etc.
If two built areas are supplied, the original value and value with 1.2 times larger than the carpet areas, you should be considered higher value. After choosing the location of the property, you should use a formula to get the property value.
The ready reckoner rate is calculated by government bodies on the basis of all factors, like open car parking slots, built-up areas, and covered car parking slots.
Factors that affect the ready reckoner rate
There are various factors that affect the ready reckoner rate:
- Amenities available in the location
- Property lifetime
- Property type
- Location of client and supplier
- The length of time that is required for delivery
How do real estate transactions are affected by the ready reckoner rate?
Mostly, real estate transactions depend on the average neighborhood price. The registration fee and stamp duty that homebuyers should pay are calculated on the basis of the market rate. Government bodies lose money when the ready reckoner rate is different from the market rate.
Difference between the market rate and ready reckoner rate
Market rate and ready reckoner rate are two different things. The ready reckoner rate is established by the government that is based upon the lowest amount of property value recorded during the transfer event for real estate registration transactions.
The actual property price that sellers and buyers negotiate while selling and buying real estate and considered market pricing. Market rates can be lower or higher than ready reckoner rates on the basis of many different factors, like whether or now the borrower has assets or collateral available to cover loan payments if they are unable to make it.
Calculating the ready reckoner rate is an easy way to get the right idea of property value. It is a good way to determine whether buying the property at a specific value is worth it for you or not.