Investors new to real estate can come across various technical jargons which may seem confusing but are important when buying a property. Some of them are circle rate and market rate, and while both of them correspond to the rate of the property there is a key distinction between them.
Circle Rate
Circle rate is the rate decided by the state government or local development authorities for a real estate property, whether it be a plot, flat, house, etc. Circle rate can vary among localities in the same city. It can give a reference price of the property to the prospective buyers. Transaction cannot take place below the circle rate of the property and thus they are typically lower than the market rate. Circle rate thus helps keep the speculative pricing in check.
Market Rate
Market Rate is the rate which is decided by the supply and demand of the property. It is decided by the seller after taking into consideration the future prospects of the property and the willingness of the buyers to spend for the property. Market rate is thus the price at which the seller will sell its property. Transaction therefore occurs close to the Market rate.
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