Buying a property doesn't have to be stressful or
confusing! However, if it's your first time buying or selling a property, there may be unfamiliar and legal words.
Our handy guide will help you understand the key pieces of real estate jargon to buy and sell like a professional:
ABSTRACT OF TITLE
APPRAISAL/ AGENT ESTIMATE
An assessment of a home's potential sale price in the market by a real estate agent. Do not confuse this with a professional valuation, which is conducted by a registered professional property valuer.
AUCTION
A public sale on a set date, where the property is sold to the highest bidder. The aim is to have a defined period to find the highest price that a buyer is prepared to pay.
ONLINE AUCTION
There are now some great services that facilitate an online auction eliminating the need to actually attend.
BANK VALUATION
This is a Bank's paid valuation by a registered property valuer of a property's value. This is often more conservative than the actual market value. This is often used to gauge how much a bank is willing to loan you for the home.
BID
Motion or verbal acknowledgement by a prospective buyer at an auction indicating the position at a price they wish to pay.
BRIDGING FINANCE
A short-term loan is used to allow a buyer to purchase a new property if the proceeds of a property he or she recently sold have not yet cleared.
CAPITAL GAINS
The profit on
the sale of a capital asset, such as a house if the house has been rented or leased.
CAVEAT
A notification
on the title declaring a party other than the owner may have an interest in the
property.
CAVEAT EMPTOR
Latin for
"buyer beware". In a property transaction, the purchaser carries the
risk. In other words, do your homework.
CONDITIONS OF SALE
The conditions applicable to a sale contract made
between a vendor and purchaser. Conditions may include:
- purchase conditional on a loan approval
- purchase conditional on the sale of an existing
property
- purchase conditional on a satisfactory property
inspection
- a longer settlement period.
CONTRACT OF SALE
The official documents accurately indicate every piece of information, detail, terms, conditions, price and dates that lock both buyer and seller into a fair and equitable completion of the deal (sale).
CONVEYANCE
Every home sale needs a contract of sale. Each state has different requirements. Conveyance is the actual action and deed which transfers ownership of property from one person to another.
COUNTER OFFER
A new offer, made after a previous offer has been rejected by the owner.
EASEMENT
A right to use the land of another or a right to prevent the owner of the land from using the land in a particular manner. Commonly used by Government authorities for electrical mains or drainage. Water authorities are one of the most common easements. These are usually for sewerage connection in an area.
EXCHANGE OF CONTRACTS
The vendor and purchaser both sign copies of the sale
contract and then legally 'exchange' these documents, after which time the contract becomes legally binding on the parties.
FEATURES
Items in a home can be taken out without damaging the items or the space in which they were located. Includes washing machines, refrigerators and other items not usually included in a property sale.
FINANCE CLAUSE
Included in a contract is when an offer is made on a
property that is 'subject to securing finance'.
FOR SALE SIGN
These have been proven to be an important part of the sales process
as anyone who drives past will see that the house is for sale. Word of mouth
from sales boards does occur. Don't fall into the trap of a huge sale board
that is mainly advertising the agent.
GAZUMPING
Where the vendor agrees to sell a property but then
sells it to another party on more favourable terms. This can occur if contracts
are not signed by the vendor. Until the vendor signs the contract of sale, they
can still negotiate with others.
HOUSE INSPECTION
Sometimes referred to as 'Inspection by Appointment'. These can be individual inspections or offered as part of an 'open house.' They can be conducted by the owner or by and agent.
LIEN
A charge, security or encumbrance on a property for the payment of a debt.
LIST PRICE
The price level at which the agency and the property owner agree to market
the property to buyers. Don't fall into the trap of overpricing or underpricing
your home. Read our blog tips on property reports
MARKET PRICE
The price level when potential buyers will be attracted and make offers.
PASSED IN
When auction bids fail to reach the reserve price set by the vendor. If a home is passed in, the highest bidder may be able to negotiate directly with the vendor.
PEST INSPECTION
Undertaken by a licensed inspector and is a visual pest and termite inspection of all accessible and available areas of the property, for the presence of active termites and termite damage. Highly recommended in suburbs known to have termites.
POA
Price on application. Not a positive way to go, as people need to know
if your home is in their price range.
PRINT MEDIA
Refers to the newspapers and glossy magazines advertising properties for
sale in your area. Don't fall into the trap of using these methods. Most buyers are online.
PRIVATE SALE
Instead of holding an auction, the vendor accepts private offers to buy, and negotiates with each potential buyer directly on the price and terms.
PROPERTY VALUATION
A written assessment of how much a property is worth, undertaken by a registered property valuer. Estate agents are not licenced to undertake property valuations. They can only provide an estimate
RENT BACK OPTION
A property transaction involving the sale of an owner-occupier's
residence to a landlord or property company and renting it back from the new
owner.
SECTION 27
This is a legal document the vendor use to request access to the deposit funds paid by the purchaser prior to settlement.
SELLER
The plain language term for the person(s) or entity selling the property. Also known as the vendor.
SETTLEMENT DATE / COMPLETION DATE
The date on which a contract of sale is finalised and
final payment is made. The buyer hands over the money (via
their solicitor) and the seller hands over the keys. The title is transferred
into the name of the buyer.
SOLD (CONDITIONALLY)
It is likely the buyer has 'conditions' that need to be met before the
sale (contract) can be locked and loaded. Most common conditions are building
inspections and approval of finance.
SOLICITOR, CONVEYANCER, SETTLEMENT AGENT
A qualified legal expert who prepares and looks after the carriage and
completion of your contract. Paying for legal advice ensures the contracts are
written correctly and it's good protection for you as either a buyer or seller.
STAGING
Preparing your home to look its best for inspections and sale. De-clutter,
clean and depersonalised. Even consider hired furnishings to maximise your
results.
STAMP DUTY
Tax levied on a contract, calculated as a percentage of the contract value. The amount varies between states and territories and the type of property ownership, for example, Torrens title, strata title or company title.
STCA
Means "Subject To Council Approval". This is just a selling tool. Seek advice from the local Council.
TITLE
The proof of ownership of the land and the dwelling that may reside on that
land. Also indicates any encumbrances that may come with the land such as
easements, power lines, public water pipes etc. Hopefully, there is no green
glow coming from behind the shed.
TITLE
A bank account
managed by a third party where funds (such as deposits and rental income) are
held on behalf of someone else.
UNCONDITIONAL / EXCHANGED
This term indicates that all the conditions pertaining to the contract
of sale have been met, and deposits are paid. Both buyer and seller make
arrangements to move in or out on the specified date.
VALUATION
An in-depth assessment of your home's likely current value by an independent certified practising valuer. (They aren't conservative, just thorough).
VENDOR
In real estate transactions, the person(s) or entity
selling the property is the vendor.
VENDOR STATEMENT
This document is provided to prospective buyers before a
property is sold. It is prepared by the seller's lawyer, conveyancer or done
with a 'do-it-yourself' conveyancing kit. Contains the property's title
information, including zoning, caveats, covenants, easements and expenses such
as rates. An easy-to-use guide to conveyancing is available from Consumer
Affairs Victoria.
ZONING
An urban
planning tool is used by local governments to determine how land is to be used.
Examples include low-density residential, high-density residential, mixed-use
and metropolitan centres.
Are there any other real estate terms that had you
confused when you first heard them? Let us know in the comments and we can add
them.
Get started with Next Address today.
Julie O'Donohue
Founder CEO
Next Address
