An A – Z snapshot of Real Estate Terms and Phrases
Like any industry, Real Estate has its own terminology. Learning what the common words mean, can have a significant positive impact on your experience in buying, selling renting your first or next home or investment property.
We have made a list of the more commonly used words and phrases, to help ease the stress of sale or purchase of your home or investment property. This list is a directly from the Real Estate Institute of Australia.
ABSTRACT OF AUCTION
A summary of the auction advertisements which appears in the property page of a newspaper.
ABSTRACT OF TITLE
A chronological summary of conveyances, mortgage or leases and other deeds giving the names of the parties and the description of the land, arranged to show the continuity of ownership of general law land not under the Torrens system.
The right of ingress to and egress from a property that abuts upon an existing street or highway. Details will be shown on Certificates of Title of both parties granting and receiving the right.
Apportionment of rates, taxes, body corporate fees, rent, insurances etc up to the date of possession or settlement on a sale or letting.
The term commonly used in America to indicate what is termed in Australia as a Valuation. In Australia, the term means an opinion of the potential saleability of a residential property by a licensed Real Estate Agent.
AUCTION AGENCY AGREEMENT
An agreement that the vendor must sign when a property is listed for auction. Details the reserve price and the costs of the auction, including advertising and the agent’s commission. Usually includes a condition that one agent will have the exclusive right to sell the property for a period during and after the auction.
One percent (1%) is the equivalent of 100 basis points.
A verbal or written offer to purchase.
(a) A term used in the Strata Titles Act to describe the body representing the building owners; (b) The control and administration of common property is vested in a statutory Body Corporate which comes into existence automatically on the registration of the plan, and to which the provisions of the Companies Act do not apply. The registered proprietors of the units are the only members of the Body Corporate. Associated rights and obligations are fixed by scheduled by-laws.
The setback from the site boundary required by statutory authorities for buildings.
The condition which exists when, under competitive conditions, the pressures of supply and demand are such that market prices are at a relatively low level, giving the buyer an advantage. An over-supply causing prices to decline.
Represents a property buyer in negotiations with a vendor or his/her agent. The buyer’s agent is paid by the buyer. Buyer’s agents should be licensed and certified to act as a buyer’s agent.
The amount by which the net proceeds from resale of a capital item exceed the book value of the asset.2 Refer to The Australian Tax Office (ATO).
CERTIFICATE OF TITLE
A document issued under the Torrens System of Title, showing ownership and interest in a parcel of land.
COOLING OFF PERIOD
A short statutory period after the contract is made, during which the purchaser may cancel the contract unconditionally. Usually does not apply in the case of auctions.
DATE OF SETTLEMENT
The date on which a contract of sale is finalised and final payment is made.
A document executed under seal. For example, a conveyance.
EXCHANGE OF CONTRACTS –
A formal legal process that creates a binding contract for the sale of real property on agreed terms. The vendor and purchaser each sign a copy of the sale contract and then exchange these documents, after which time the contract becomes legally binding on the parties. The parties are then bound to proceed to settlement, subject to any cooling off period that may apply. A deposit is usually also paid by the purchaser to the vendor during the exchange process. Any party that unilaterally declines to proceed to settlement may forfeit deposit monies or be subject to a damages claim.
Absolute ownership subject to limitations imposed by the state; also known as a fee simple estate. An estate held for perpetuity
A period when a mortgage payment or other debt becomes past due and before it goes into default.
The purchase price paid when land or goods are sold at auction.
An amount given by a buyer to the estate agent acting for the seller. It shows the buyer’s serious commitment to the property and is commonly 10% of the purchase price.
Possession and use of a property by virtue of a lease.
A written contract recording the agreement between the owner and manager of real estate concerning the duties, responsibilities and liabilities of the owner and the manager in the management of that real estate.
The price actually paid, or agreed in a contract to be paid, for an asset. It differs from market value in that it relates to an accomplished fact, whereas market value is and remains an estimate until proved. Market price may involve circumstances not normally included in market value.
Market value is the estimated amount for which an asset should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing, wherein the parties had each acted knowledgeably, prudently and without compulsion.
MEDIAN – The middle number when data is arranged from lowest to the highest in sequence. If there are two median scores, they are averaged to provide the true median. The median is also known as the 50th percentile.
The consideration offered to purchase or lease an asset.
Where a vendor grants selling or leasing rights over a property to any number of agents on a non-exclusive basis. The first agent to procure a buyer ready, willing and able to purchase or lease the property on terms acceptable to the vendor receives the commission. Also known as a Common Listing, Simple Listing or Open Agency.
If a property is not sold at auction because the owner’s reserve price has not been reached, it is passed in.
Approval from the relevant authority to use property for a specified use.
To terminate a contract of sale.
The lowest acceptable price fixed by the vendor.
The condition which exists when, under competitive conditions, the pressures of supply and demand are such that market prices are at a relatively high level, giving the seller an advantage. An under-supply causing prices to increase.
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.
The date on which a contract of sale is finalised and the balance of money is paid for an asset.
The tax imposed by state governments on certain contracts (e.g. Contracts of Sale and Registered Leases). The amount of tax payable is calculated as a percentage of the contract value. See also individual state legislation.
The registered plan of a strata title property showing the boundaries of lots and unit entitlements. Pursuant to legislation on strata or unit titles.
(a) The formal ownership of property held within a strata plan where property is defined within horizontal and vertical boundaries; (b) A scheme of property ownership where each proprietor owns parts of a building and has joint rights with other proprietors over the land and other common areas.
The sale of an asset through the seeking of written bids.
The form of ownership of real estate (i.e. Torrens, strata or company title).
Documents evidencing the ownership of property.
The title to land by registration. Originating in South Australia under the stewardship of R.R.Torrens (later Sir Robert Torrens) and enacted in 1858. The Torrens titles has superseded the ‘Common Law Title’ system throughout Australia. Under the Torrens system dealings and ownership of land are managed by registration with the Titles Office.
A statutory concept of value used mainly for rating and taxing purposes, which envisages the land as being in its virgin state but enjoying the benefits of all external factors which influence the value at a given date. The value of land as if all existing improvements thereupon, including site works, had never been built or made, but regarding all other lands as in their current circumstance, including all improvements, roads, services and amenities.
The proportion of inhabitable rental premises which are vacant.
(a) The process of estimating value.5; (b) The prediction of the value of an asset at a point in time, depending on the purpose for which the valuation is required.
An addition to, omission from, or alteration to a contract or to the contract conditions.
One who sells anything. In real estate transactions, the person(s) or entity selling the property.
An auction term signifying that a reserve price has not been set, such that the highest bid will prevail.
The derived percentage return of a property assessed from the net income and the market value or price. It is calculated by dividing the net income by the opening market value or price.
A local planning tool to control the present and future development of land including residential.
At Raine&Horne Batemans Bay, we wish to support you through your home or investment purchase and or sale journey. If you would like to know more about our qualified and experienced team, our services or how we can support your Real Estate experience, contact us or head over to digitally meet the team.