Real Estate Terminology

 

AGENT - A licensed real estate agent or agent's representative. 

ALLOTMENT - A section of land.

APPRAISAL - An opinion of an agent as to a property’s saleability and estimated market worth based on current market conditions and the property’s characteristics. This is different to a sworn valuation by a registered valuer.

ASSETS - What you own.

AUCTION - The sale of a property by a bidding process. 

BREACH OF CONTRACT - Not fulfilling one or more terms of the contract.

BRIDGING FINANCE - A short term loan, usually at a higher rate of interest, which helps people to cover the purchase of a property while waiting to sell or settle on theirs. The security is usually on both properties.

BUILDING REGULATIONS - These are designed to uphold the standards of public safety, health and construction. They are put in place by local authorities to control the quality of buildings.

CAVEAT - A document lodged by a person with a legal interest in a property, to ensure the property is not sold without their knowledge. 

CAVEAT EMPTOR - Latin for “let the buyer beware”. In certain cases this puts the burden onto the buyer to be satisfied before purchasing a property.

CERTIFICATE OF TITLE - A document which details the ownership of land along with the dimensions and other details. Generally it is held by the lender as security for a loan. 

CHATTELS - Chattels are items that are generally fixed on the property and include carpets, light fittings, stove, dishwasher, blinds, curtains, fixed heaters, television aerials. Some BBQ’s and pool cleaners may also be classified as chattels. 

CMA - Comparable Market Analysis is the price comparison of your home with others that are currently for sale and those that are similar in size and location that have sold.

COMMISSION - The fee payable to a real estate agent for selling a property, payable by the seller.

COMMON PROPERTY - Areas on a title which have joint ownership with another property; often common with crossleased, strata title and unit title properties.

CONDITIONAL CONTRACT - A contract that is agreed to by the seller and the buyer, where one or more conditions need to be met, usually within a specified time period, by either the seller or buyer. For example, subject to raising finance, to sale of the buyer’s home, to completion of work on the property, to title search, to structural or pest reports.

CONDITIONAL FINANCE APPROVAL - Finance approval has been given subject to confirmation of certain information stated by the applicant. Information can include copies of pay slips, length of employment, value of assets and the value of the property being purchased will be considered as well.

CONTRACT OF SALE - A written document that sets out the terms and conditions for the purchase or sale of land and all improvements thereon.

CONVEYANCING - The legal process of transferring the ownership of property and money, making sure that everything is legally correct as the property transfers from one owner to another. This is usually done by a settlement agent or solicitor.

COOLING OFF PERIOD - Set time where buyer can withdraw from the contract however, a penalty is incurred.

COVENANTS - Special rules and regulations which might apply to a property regarding its use. 

C.T. - Certificate of Title. Document that shows the legal owner of a property.

DEPOSIT - A defined percentage of the purchase price, or an agreed amount, paid by the buyer which is held in Trust as confirmation of intention to buy.

EASEMENT - A right held by someone to use land belonging to someone else for a specific purpose. Mains, drains, footpaths and water pipes are usually covered by an easement. 

ENCUMBRANCE - An easement, mortgage, or other liability on a property which impedes its use or transfer. 

EQUITY - The value you hold in your home. The total value less any mortgage or other liabilities on a property. 

EXCLUSIVE AGENCY LISTING - Only the agency appointed has the right to sell the property.

FSBN - For Sale By Negotiation. This is an undisclosed price marketing strategy where often a price bracket is used to advertise the property.

FSBO - For sale by owner

GENERAL AGENCY LISTING - A listing that is open for any agent in any company holding an agency licence to work.

INTEREST ONLY LOANS - A loan on which only interest is paid periodically and the principal is paid at the end of the term.

INVESTMENT - The purchase of an asset such as real estate with the ultimate goal of generating income and producing capital gain on the resale of the asset.

JOINT TENANTS - The equal holding of property by two or more persons.

LAND TITLES OFFICE - A Government department where all property records are held and any changes are registered. These are public records so you can go there and look up any title to a property.

LEASE - A document granting possession of a property for a stated period without transferring ownership. The lease document specifies the terms and conditions of occupancy by the tenant, including period of occupancy, rent payable 

LEASEE - the tenant or person leasing a building

LEASOR - the landlord of the property being leased.

LIABILITIES - The outstanding debts you owe.

LISTING AUTHORITY - A contract between an owner and the real estate company selling the property. It is normally for a set number of days and sets out the commission rate and any additional costs. This states whether the authority is an exclusive, general, multi-list, tender or auction listing.

LOAN PERIOD - The number of years that a home loan covers. 

MATURITY DATE - The last day of the term of the home loan agreement. The home loan must then be paid in full or a new home loan agreement is made. 

MORTGAGE - The security over a property given to the lender for the repayment of the loan. The lender (mortgagee) has the right to take the property if the borrower (mortgagor) fails to repay the loan.

MORTGAGEE - One who lends money for the property.

MORTGAGE STRESS - Households who pay more than 30% of their gross (pre tax) household income in housing payments

MORTGAGOR - One who borrows money to purchase property. 

NEGATIVE GEARING - Is a tax deductible benefit that applies to the shortfall of the income generated from an investment property versus the cost of maintaining the property including the interest only component of the loan.

OFFER TO PURCHASE - A formal offer for a specified price for a specified property, normally made on a sale and purchase agreement.

OWNERS CORPORATION - Legal entity and management organisation, set up for and by the owners of a complex or building responsible for administering, maintaining the building and its surrounds, including common areas like gardens, pool, parking and exterior. 

PASSED IN - A property is passed in at an auction if the highest bid fails to meet the sellers reserve price.

PLAN - This shows the house design, elevation of the house, number and size of rooms, kitchen, bathroom and laundry layout and the position of the house on the land.

POSITIVE GEARING - Where the rental income received is greater than the property mortgage and expenses.

POSSESSION DATE - The day the buyers take occupancy of the home.

PRINCIPAL - 1) The actual amount of money that has been borrowed to buy a property excluding interest. 2) The licensed operator of a real estate agency.

PRIVATE TREATY SALE - Sale of property via an agent through private negotiation and contract.

PRIVATE SALE - The owner does not engage an estate agent but acts on their behalf, dealing directly with the buyer and preparing the agreement. 

PURCHASER - The eventual buyer of the home.

REAL PROPERTY - Land, with or without improvements. 

RESERVE PRICE - The amount below which a home owner will not sell on the day of auction.

RIGHT OF WAY - A legal right of access across a property. 

SALE AND PURCHASE AGREEMENT - The contract between the buyer and the seller. 

SECURITY - Property offered as backing for a loan. In the case of a home loan, the property itself usually acts as security.

SECTION - A section of land subdivided from a larger portion of land generally referred to as an allotment or lot. 

SEMI-DETACHED - Two buildings joined by one common wall. 

SETTLEMENT - Completion of a sale when the balance of the contract price is paid to the owner and the buyer is legally entitled to take possession of the property. 

SOLE AGENCY - Only the agency appointed has the rights to sell the property. 

STAMP DUTY - A state government tax on financial transactions in Australia. 

STRATA MANAGEMENT - Legal entity and management organisation set up for and by the owners of a complex or building responsible for administering and maintaining all of the building and it’s surrounds, including common areas like gardens, pool, parking and exterior (also referred to as Body Corporate). 

STRATA/COMMUNITY/UNIT TITLE - Most commonly used for flats and units, this title gives you ownership of a small piece of a larger property, including “air space”. You have the selling rights to a particular unit and can lease, sell or dispose of your unit as you desire. You also have an undivided share of the common land and become a member of the Body Corporate which controls the maintenance and has stipulated rules governing occupation. 

STRATUM TITLE - This title gives you legal ownership over a piece of property and also a share in the common land of the area of flats or units. It does not include “air space”. 

SUBJECT TO FINANCE - A condition inserted into a contract for the benefit of the buyer. This makes the contract subject to the buyers confirming that they have raised finance within a certain amount of time. 

SURVEY - Confirmation of the property boundaries and improvements. 

TENDER - A tender involves potential purchasers placing confidential bids for a property by a specific date. The bids may or may not include conditions and any bid can be accepted or rejected by the owner. 

TITLE SEARCH - The process of examining the land title to ensure the owner has the right to sell and therefore transfer ownership. It details the names of the owners and other information about the property, such as encumbrances or caveats on the title. 

TORRENS TITLE - Title administration that applies to most land in Australia. 

UNCONDITIONAL CONTRACT - A contract for the sale of a specific property that the owner and buyer have agreed upon has no conditions, or the conditions have been met, therefore constituting a sale.

UNCONDITIONAL FINANCE APPOVAL - This is given once all of the details supplied by the applicant have been fullfilled and the value of the property being purchased has been assertained.

VACANT POSSESSION - When the ownership is transferred by the sale of a property it will be empty, ie. there will be no tenants living in the property, or leases giving someone else use of the property. 

VALUATION - Assessment of the value of a property given in a written report, by a licensed or registered valuer. 

VENDOR - A person who owns the property for sale ie the seller/owner. 

ZONING - Control of the use of land exercised by the local authorities.