Real estate transactions involve terms and jargon that may be unfamiliar to buyers and sellers. Whether you're a first-time homebuyer or a seasoned property seller, understanding these terms is crucial for making informed decisions in the real estate market. In this blog post, we'll provide a comprehensive glossary of real estate terms to help Buyers (Purchasers) and Sellers (Vendors), navigate the complexities of buying or selling property.
A
Appraisal: An estimation of a property's value based on various factors like location, condition, and comparable sales in the area.
Auction: An auction is the public sale of a property to the highest bidder. A licensed auctioneer offers the property for sale at a starting price and takes increasing offers from registered bidders.
B
Building Inspection: Home Inspection: A thorough examination of a property's condition, typically conducted by a professional inspector, to identify any structural issues.
Buyer's Agent: A real estate agent who represents the buyer's interests in a transaction. Though not as common in Australia as it is in other areas of the world, the use of a buyer’s agent is growing in popularity.
Buyer's Market: A market condition where there are more properties for sale than buyers, giving buyers an advantage in negotiations.
C
Capital Gains Tax: Capital Gains Tax (CGT) is the tax you need to pay when you make a profit from the sale of an asset, such as property or shares. You report your capital gains and losses on your tax return, so CGT is part of your income tax rather than a separate tax.
Commission: The fee or payment made to an agent for services rendered, such as the sale of property, often calculated with reference to the value of the property, contract or agreement.
Common property: (a) Land or a tract of land considered as the property of the public in which all persons enjoy equal rights. A property not owned by individuals but by groups; (b) In a home (villa), unit or flat development: that part of the property owned and used in common by all the unit or flat owners or occupiers and which is maintained by the Body Corporate.
Conditions of sale: The conditions applicable to a sale contract made between a vendor and purchaser.
Cooling off period: A short statutory period after the contract is signed, during which the purchaser may cancel the contract unconditionally. Usually does not apply in the case of auctions.
Contingency: A condition that must be met before a real estate contract becomes legally binding.
Contract of sale (COS): An agreement relating to the sale of property, which expresses the terms and conditions of sale.
Conveyancer: a conveyancer specialises in the legal aspects of buying and selling property. A conveyancer can also be a solicitor.
Counter offer: A new offer as to price, terms and conditions, made in reply to a prior unacceptable offer. Normally the counter offer terminates the previous offer.
D
Deposit: Percentage of total consideration (price), or an agreed amount, paid on exchange of contract for purchase of an asset.
E
Easement: A right to use the land of another (not involving the taking of any part of the natural produce of that land, or any part of its soil) or a right to prevent the owner of that land from using that land in a particular manner. Most commonly used where Government authorities have the right to run, for example, electrical mains or drainage through private property. Some form of compensation may be payable.
Equity: Equity is the value a property accrues over time which is above the debt the owner owes on their mortgage.
Exclusive Sale agreement: The agreement between an agent and a vendor establishing an Exclusive Listing.
F
Fixed-Rate Mortgage: A mortgage with a constant interest rate and monthly payments that don't change.
Fittings: Installed items that may be removed from real estate without causing irreparable damage to the land, structure, or use of the premises.
Fixtures: Those parts of a property affixed to structures or land, usually in such a manner that they cannot be independently moved without damage to themselves or the property housing supporting or pertinent to them. Fixtures are usually included in a sale and commonly include items such as carpets and awnings.
G
Going concern: An operating business that will remain in operation for the foreseeable future. It is assumed that the entity has neither the intention nor the necessity of liquidation or of curtailing materially the scale of its operations. Properties sold as a going concern may be treated differently for taxation purposes.
Guarantor: A person who undertakes to fulfil a contract if the main party defaults.
L
Licensed real estate agent: A Licensed Real Estate Agent may perform the activities in the conduct of a real estate business. He/she is licensed to hold responsibility for an agency’s legislative compliance activities.
Listing Agent: A real estate agent who represents the seller and lists the property for sale.
M
Mortgage: A mortgage is a loan where the real estate purchased is used as security, or collateral, to the lender.
Multiple Listing Service (MLS): A database used by real estate agents to list properties available for sale.
N
Negative Gearing: When the expenses of owning an investment property are greater than the rental earnings, this is what’s called negative gearing. This can be used to reduce tax liability.
O
Offer: The consideration offered to purchase or lease an asset.
ONO: Or nearest offer.
Owners Corporation Manager: (formerly Body Corporate) An owners’ corporation manager is someone who helps lot owners with the financial, administrative and maintenance requirements of their development. There is a range of qualities to look for in an owners’ corporation manager.
P
Pre-Approval: A lender's written commitment to finance a homebuyer, based on a thorough analysis of their credit, income, and employment history.
R
Rates: Periodic property taxes levied by Local and State Governments (e.g. water rates).
Real Estate Trust account: A real estate trust account is an account held by an authorised financial institution into which an estate agent deposits money from a client. The money may include sales deposit, advertising expenses.
Renter: A renter is the person or people living in a property in agreement with the owner through a lease.
S
Section 32: Also known as a Vendor Statement, it is a mandatory document that discloses information that may affect the value of the land being sold in a property transaction. Also known as a Vendor's Statement, the term 'Section 32' is derived from the correlating section under the Sale of Land Act 1962 (VIC).
Section 27: Commonly known as an “Early Release of Deposit Authority”, allows the vendor to request access to the deposit funds paid by the purchaser prior to settlement. It is a statement provided by the vendor that provides information required under s. 27 of the Sale of Land Act 1962 (“the Act”)
Seller's Market: A market condition where there are more buyers than properties available for sale, giving sellers an advantage in negotiations.
Settlement: This is the final stage of the sale when the purchaser completes the payment of the contract price to the vendor and takes legal possession of the property.
Settlement Date: A settlement date is the day when ownership of a property is legally transferred from the seller to the buyer. Put simply, it’s when a buyer gets the keys to their property.
Solicitor: A solicitor is a legal professional who assists clients in their everyday legal matters and affairs. In the case of real estate, they can provide clients with advice and manage the legalities involved with the sale.
Stamp Duty: Stamp duty is a one-off government tax levied on most real estate purchases. This tax is paid on homes, investment properties, holiday homes, vacant land, primary production land and sometimes even business transfers. There are some exemptions and concessions for stamp duty.
Subdivision: When a block of land is divided and each of the subdivided blocks falls under a separate title, it is referred to as subdivision. A person may be subject to capital gains tax (CGT) when they sell subdivided blocks.
U
Under Contract: The seller and the buyer have agreed on a price for the property and signed a contract. But the contract is still subject to conditions like a cooling off period and could fall through before the sale is completed.
V
Valuer: A person who is: (a) registered / licensed / approved to carry out property or plant and machinery valuations under any State, Territory or Commonwealth legislation; and / or (b) a member of the Australian Property Institute who is accredited as a Certified Practising Valuer.
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Navigating the real estate market can be less daunting when you have a solid understanding of the terminology involved. This glossary provides a starting point for both buyers and sellers to familiarise themselves with essential real estate terms. However, it's crucial to consult with a qualified real estate professional to ensure you fully comprehend the implications of these terms in your specific buying or selling situation.
Contact one of the highly skilled and experienced real estate agents from One Agency Durrand & Co for all your property buying and selling needs.