Realestate Glossary

Agency

An agency is the relationship, which exists at law between two or more persons whereby one (the agent) is authorised to act on behalf of the other (the principal) to do certain speci ed acts. A common form of agency occurs in the sale, purchase and leasing of real estate

Appreciation

An increase in the value of a property.

“As Is”

Selling the property without warranties as to the condition and/or the tness of the property for a particular use. Buyers are solely responsible for examining and judging the property for their own protection. Otherwise known as “As Is, Where Is” and “In its Present Condition.”

Auction

A preferred marketing option where you list your property without a price, supported by very intensive marketing leading buyers to the auction day where they must bid against each other to successfully purchase your property in an unconditional situation. / A public sale of property in which prospective purchasers bid until the highest price is reached.

Auctioneer

Person holding an auctioneers license and able to conduct and call auctions.

Bank valuation

A bank’s estimate of a property’s value. This is often more conservative than the actual market value.

Bid

A verbal offer to purchase

Bridging finance

A short-term loan 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.

Building Inspector

An authorised person who is responsible for checking buildings in the course of construction and completed buildings to ensure that they have been constructed in accordance with building control provisions.

Capital gains

The profit on the sale of a capital asset, such as a house.

Caveat

A notification on the title declaring a party other than the owner may have an interest in the property.

Caveat Emptor

‘Buyer beware’, that the risk in a property transaction lies with the purchaser.

CMA

Current or Competitive Market Analysis (CMA), is a written price comparison of your property with others that are for sale or were recently sold.

Chattels

Items of property that can be physically removed from your house or business because they are not attached to it in some way. Examples may include fridges, curtains, carpets, easily removable light fittings and wall heaters, and sometimes furniture. If chattels are to be included in the sale, the seller should speci cally state this in the Sale and Purchase Agreement.

Conditional Contract

Any contract that includes conditions that must be satisfied before the parties become bound to carry out the terms of the contract. The contract is called “conditional” until the conditions listed are satisfied. Both the buyer and the seller can put conditions in the offer. Buyers often ask for conditions about checking the Certificate of Title, and getting finance or a building consultant’s report. A conditional contract is still legally binding, but the obligations under it are suspended until it becomes unconditional.

Commission

The fees for selling the property - payable by the seller, to the real estate company.

Contract

A contract is a legally enforceable agreement. Used in Real estate to mean the Sale and Purchase Agreement.

Cooling O Period

A short statutory period after the contract is made, during which the purchaser may cancel the con- tract unconditionally. Does not apply in the case of auctions.

Counter offer

A new offer, made after a previous offer has been rejected by the owner.

Deposit

Percentage of total consideration, or an agreed amount, paid on exchange of contract for purchase of an asset.

Depreciation

A reduction in the value of an asset over time.

Equity

The value an owner of a property has in the asset above the debt owed.

Excluded Fixtures

Items that are presumed to stay with the property when sold but have been specified on the contract as not remaining.

Exclusive listing

When a vendor has signed an agreement to make an agent solely responsible for the sale of a property during a specified period. If another agent sells the property during that time, the original agent is entitled to any commission.

Fixtures or Fittings

Items of property that are attached to the house or business because they are permanently attached in some way (by nails or wires for instance). Examples are the stove or oven, built in furniture, light fittings, fitted carpets and TV aerials.

Freehold

A freehold property has a clear title of ownership and is not subject to lease.

Guarantor

Someone who agrees to fulfill a contract if the main party to the loan defaults.

Included Chattels

Moveable items you decide to sell with the property, such as pool equipment, fridge, freestanding glasshouse, shed or playhouse, dishwasher etc. These are noted in the contract if they are included in the sale.

Interest

The amount paid by a borrower to a lender in addition to the main amount borrowed (the “principal”). The interest rate can be fixed, variable or a combination of the two (“split loan”).

Interest-only loan

When only the interest is repaid during the term of a loan. The principal is repaid after the loan term expires.

Leasehold

Sometimes land is subject to a lease. The owner of the land leases to the tenant for a fixed rental sum for a fixed period, eg. # years.

Listing Authority

A contract between the owner and the real estate company marketing the property, detailing the length of the agency, commission rate and any additional costs. The type of marketing method to be used is assigned and a summary of information about the property is detailed on the listing authority.

LMI

Lenders mortgage insurance. Often payable when a borrower doesn’t have a big deposit, it’s designed to protect the lender against default.

LVR

Loan-to-value ratio: the proportion of money borrowed versus the value of a property. When the LVR is high (over 80 per cent, for example), a lender is more likely to charge lenders mortgage insurance.

Marketing Fees

Money paid by a seller that goes directly to increase advertising spread.

Marketing Program

A promotional package put together to give a property exposure to the market. It may include advertisements to be used, a calendar of dates for advertisements, open homes, buyer contact and service.

Negative gearing

When the earnings from an investment property are – in the short-term, at least – less than the costs associated with the investment. The shortfall can be used to reduce tax liability in Australia, for now.

No Price Marketing

Usually called ‘Auction’, ‘Tender’ or ‘For Sale by Negotiation’. The price is not revealed to buyers during the marketing promotion. MWP - Marketed without a Price.

On the Market

During a real estate auction when the bid has reached the vendor’s reserve price the property is announced as ‘on the market’ and is going to be sold at that auction.

Passed-In

If a property is not sold at auction because the owner’s reserve price has not been reached, it is passed in.

Reserve Price

The reserve price is the minimum price the seller will accept for their property at the auction. This is kept confidential between the seller, listing agent and auctioneer.

Settlement date

The date on which a property sale is finalised. The purchaser pays the vendor and gains possession of the home at this time.

Stamp duty

Tax levied on a contract, calculated as a percentage of the contract value. Varies between states and territories.

Title

The type of property ownership, for example Torrens title, strata title or company title.

Trust Account

A legislatively required bank account where monies are held by an agent for or on behalf of another person e.g. deposits, rental etc.

Valuation Report

A document that records the instructions for the assignment, the purpose and basis of the valuation, and the results of the analysis that led to the opinion of value. A Valuation Report may also explain the analytical processes undertaken in carrying out the valuation, and present meaningful information used in the analysis. Valuation Reports can be either oral or written. The type, content and length of a report vary according to the intended user, legal requirements, the property type, and the nature and complexity of the assignment. The terms, Valuation Certificate and Valuation Report, are sometimes used interchangeably.

Vendor Bid

A type of bid at an auction which is made by the auctioneer on behalf of the vendor and clearly dis- closed as either a Seller or Vendor bid.

Zoning

An urban planning tool used by local governments to determined how land is to be used. Examples include low density residential, high density residential, mixed use and metropolitan centre.

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