Written on the 6th of October 2008 by Hot Property Specialists Buyers Agency
When it comes to Real Estate there are a whole lot of terms and phrases that some of us probably have never heard of before. Therefore have we put together a list of these tems and definitions of the terminology used in the real estate market. This Real Estate Dictionary is a your guide into the world of real estate. You can simply look up any words and their meaning, if you are lost in "Real Estate Translation".
Advertised with a price or without a price
Asking Price: The listed price of a property. This is a guide of the sellers expectations but may not always be the selling price. This price does not mean that this is what the property is worth. What truly determines the price is what the seller is willing to sell for and what the buyer is willing to pay without duress. There may be many factors which influence the price.
Offers over: This can indicate that the owners expectations may sit anywhere up to 10% above this advertised price. Even though the term ‘offers over’ is used, this does not mean that you can’t make an offer to purchase that is less than that and on a number of occasions we have purchased properties for significantly less than the ‘offers over’ price.
Acceptance
Consent by the person receiving the offer to be bound by the terms and conditions of the person making the offer. Acceptance of the offer constitutes an agreement.
Air Rights
Rights concerning the building upon, or occupancy of, the vertical space above the specified site. (Air easement)
Allotment
A small site for home building, sometimes called a block.
Amenity
A feature of a property that enhances its attractiveness and increases the occupant’s or user’s satisfaction although the feature is not essential to the property’s use, e.g. scenic views, recreational facilities and proximity to transport.
Amortisation
Regular repayments are made over an agreed time to recover your capital investment.
Apartment
Originally, the American word for a flat; but in Australia it might also be a Suite or just a room, not necessarily self-contained.
Appreciation
An increase in the value of a property due to changes in market conditions or supply and demand etc.
Assesed Value
The valuation placed on a property for the purpose of taxation by an authority.
Asset
Anything of monetary value that is owned by a person, e.g. personal property, real estate, bank accounts.
Auction
A public sale of a property or real estate that is sold to the highest bidder. Passed In: The highest bid fails to meet the reserve price of a property at an auction and consequently does not sell. Cooling-Off period: There is no Cooling off period when purchasing under Auction conditions. Reserve Price: The minimum price that a seller will accept at auction.
Balance of deposit
This is the amount of deposit left after your initial deposit. Please note: some agents will tell you that you must pay a 10% deposit or will encourage you to place a premium dollar amount but you can place a minimal deposit of your choosing
Beneficiary
The person designated to receive the income from a trust, estate, or a deed of trust.
Body Corporate
An administrative body made up of all owners within a group of units or apartments of a strata building. The owners elect a committee that handles administration and upkeep of the site
Bona fide
Genuine, honest, in good faith.
Bond
A sum of money paid by a tenant and held by the Rental Bond Board to ensure against defaulting on payment and damage to a property.
Boundary
The lines that define the perimeter of a property.
Bridging Finance
A temporary loan to bridge the time-gap between paying for one property and receiving payment from a previous property.
Building Code
Local regulations that control design, construction and materials used in construction.
Building Line
The uniform distance, usually from a road, behind which buildings must be erected.
Building Regulations
Laws laying down standards in materials and construction methods which you must observe to maintain health, safety and certain design minimums in any building or alteration.
Business Day
A standard day for conducting business. Excludes weekends and public holidays.
Buyer’s Agent
- Hot Property
Specialists
Buyers Agency
Also known as a Buyer’s Advocate. Engaged by the buyer to search and negotiate on the buyer’s behalf.
Buyers Agent only work in the best interest of their clients, “The Buyers”
Buyer’s Market
When the demand for property is less than the supply, so the advantage shifts to the buyer.
Capital Expenditure
The cost of an improvement made to extend the useful life of a property or to add to its value.
Capital Gain
The difference between the purchase price and the selling price in the sale of an asset (i.e. the actual profit made)
Capital Improvement
Any structure or addition to a property erected as a permanent improvement that adds to its value and useful life.
Cash Flow
A measure of cash flow and outflow from the business or project. Positive cash flow means more money is coming into the business/project than is leaving it. Negative cash flow is the reverse.
Caveat
A warning on a title to a purchaser that a third party might have some interest or right in the property.
Caveat Emptor
A Latin phrase for “Let the buyer beware”, i.e. the onus is on the buyer to be satisfied with any item before purchasing.
Certificate of Title
A description of a property with the registered owner/s names along with any encumbrances, i.e. mortgages or easements or any other dealings which may adversely affect a potential buyer.
Chattels
Moveable items of personal property such as furniture that may be included in a sale.
Clear Title
A title that is free of lien or legal questions as to ownership of the property.
Client
(in a real estate Transaction)
Selling Agent (Real Estate Agent): A real estate agent is appointed on a Form 22a ‘Appointment of Real Estate Agent’ when selling a clients (vendors) property. This form must be in place before they can act on the sellers’ behalf. They must, at all times, act in the best interest of the seller.
Buyers Agent is still a Real Estate agent but the total reverse - they work wholly and solely in the best interests of the client (buyer) at all times and the same Form 22a applies.
This is where the sale prices of sold properties and the prices of properties currently on the market of similar styles, similar land size, similar position in the street and in the same suburb or similar standing suburbs are compared to arrive at the ‘market’ price of the target property.
This does not take in to account, the emotions of the seller nor the buyer.
Commission
A proportion (usually a percentage) of the sale price of a property paid to a real estate agent for negotiating a real estate transaction.
Common Property
Areas of a building, land or amenities within a strata title property that are shared by all owners, e.g. a driveway.
Condominium
An American term starting to come into Australian usage covering ownership of a flat or unit and the owners interest in parts of the property is used by other owners.
Contract of Sale
When several parcels of land are put together, a new Certificate of Title is issued to replace all the earlier certificates.
Consolidation of Title
An agreement in writing setting out the terms and conditions relating to the sale or purchase of a property. It is also the purchase document signed at an auction. Differs from State to State.
Cooling-off period
The legal entitlement of a property purchaser to withdraw from a contract by giving written notice within five (5) clear working days after the contract is signed. Penalties can apply if right is exercised.
Corridor Development
Planning schemes calling for “finger development” of urban dwellings with rural land in between.
Cover Note
Immediate insurance cover, often issued by an insurance broker on the insurance company’s behalf, for a property which has just been bought.
Covenant
Terms, conditions and restrictions noted on the title. A covenant may affect future plans or resale of the property.
Deed
A legal document conveying title to a property.
Default
Failure to satisfy conditions e.g. condition of sale or purchase.
Deferred Income
Future income as from a lease which included periodic rent increases.
Deposit
A percentage of the purchase amount or specified dollar amount given to bind the sale of real estate.
Depreciation
Drop in a property’s value due to passage of time, deterioration, or changes to neighbouring properties or other causes. Also: Book depreciation is the amount you can claim for tax purposes for the replacement of an asset.
Disbursement
A cash expenditure for the purpose of settling a debt.
Dual Occupancy
A block of land which is zoned so that two distinct dwellings are permitted to be constructed. Can also mean a dwelling which allows for separate occupancy (eg self contained flat) under the one roof. May or may not be council approved.
Duplex
A type of construction where two buildings are attached together by a common wall.
Easement
A right that someone has to use the land belonging to another, e.g. a water authority may have a sewerage easement across part of your property.
Economic Life
The potential number of years a property could be profitable.
Encroachment
Part of a house or establishment illegally overhanging the street or the neighbouring property.
Encumbrance
An impediment to the use or transfer of the property in the form of an interest or right in the property, e.g. easement, mortgage or caveat.
Environmental Impact Study
An experts assessment of long-term environmental effects of a particular land-use scheme.
Equity
The amount of an asset actually owned. Equity is the difference between the market value of the property and the amount still owed on the mortgage.
Eviction
The lawful expulsion of an occupant or tenant from a property.
Exclusive Authority
Written contract that gives one real estate agent the exclusive right to sell a property in a specified time period.
Fee Simple or Freehold
Owners of property have fee simple or freehold estate which is the highest form of ownership.
Fiduciary
A person who essentially holds the character of a trustee. Real estate agents and salespersons are considered by law to be fiduciaries, thus they have a duty to act primarily for the benefit of the principal (the person who employed them) and not their own. A fiduciary must act with the highest degree of care and good faith in relations with the principal and on the principal’s business. Penalties for failing in fiduciary duties may be quiet severe.
FIRB
Foreign Investment Review Board. A Commonwealth Government organisation that provides guidelines for the approval of the purchase of Australian property by a persons not ordinarily resident in Australia.
Fittings
Objects that can be removed from a property without causing damage to it.
Fixtures
Fixed items that cannot be removed without damaging either the property or the fixture itself, e.g. cupboards.
Footing
The footing supports the building on its foundations.
Freehold
As estate in real property which continues for an indefinite period of time. Freehold estates may be inheritable or non-inheritable. Inheritable estates include the fee simple absolute, the qualified fee, and the fee tail. Non-inheritable estates include various life estates that are created by acts of parties, such as an ordinary life estate, or by operation of law. Can also mean the ‘land and building ownership’ of a property, esp commercial.
Gazumping
Where a seller agrees to sell to one buyer but then either sells to another buyer or raises the price when two or more buyers show interest.
Gearing
The ratio of your money or borrowed funds for investment.
General Law Title
Such a title pre-dates the Torrens Title System under which ownership is government-recorded by Certificates of Title; it is based on a comprehensive history or ownership.
Gross building area
(GBA) This method is used in all types of building primarily for purposes of site coverage calculations and development applications. It is used also for preliminary cost estimates but has been substantially superseded by GFA (Gross Floor Area) for that purpose.
Habitable
Suitable for occupancy. Local building codes ensure that structures are habitable through requirements for building permits and certificates of occupancy.
Holding Deposit
An initial (goodwill) sum of money given to register interest in or bind the sale of real estate before the full deposit is paid. For example, if a property is purchased on Saturday, the agent may take a holding deposit of a few hundred dollars until the buyer can arrange for the full deposit to be paid on Monday.
Home Inspection
A thorough inspection that evaluates the structural and mechanical condition of a property. A home inspection may be a special condition of a purchase. May also be known as a ‘Building Inspection’
Investment Property
A property that is not occupied by the owner but leased to produce an income.
Joint Tenancy
A form of co-ownership that gives each tenant equal shares and rights in the property including the right of survivorship, e.g. ownership of a property passes to the surviving owners.
Land Tax
A State based tax based on the value of a property (not principal place of residence) that is paid by the owner.
Landlord
A person who rents property from another; a lessor. A property owner who surrenders the right to use property for a specific time in exchange for the receipt of rent.
Lease
A written agreement between a landlord and a tenant granting a period of tenancy of a property under specific terms and conditions.
Leasehold
The right to use and have exclusive possession (but not ownership) of real estate for a specified period and subject to the fulfilment of certain conditions as recorded in a lease agreement.
Lessee
A person leasing a property.
Lessor
The owner of a property that is leased to another person.
Lien
A legal claim against a property that must be paid off when it is sold.
Life Estate
Also called Tenancy for Life. A freehold interest (in real property) that expires upon the death of the owner or some other specified person.
Listing
1. A written contract between an owner and a real estate agent, authorising the agent to perform services for the principal involving the owners’ property.
2. The property so listed with an agent
Market Value
Is the highest price a ready, willing and able real estate buyer will pay and the lowest price a real estate seller will accept. This assumes that there is sufficient activity in the market place to generate enough buyers and sellers so that neither party controls the price. Establishing market value is the objective of an appraisal, and can be based on factual, unbiased information such as the sale of similar property in a similar area, at a similar time.
Mortgage
A legal document that pledges a property to the lender as security for payment of a debt.
Mortgagee in Possession
The mortgagee gets a court order to take possession of the property, usually after a mortgagor defaults on repayments.
Negative Gearing
Where the return on investment is not sufficient to cover the costs on the investment, e.g. property maintenance and interest on the loan.
Nominee
A person who, in a limited sense, acts for or represents another.
Notice to Vacate
A notice to a tenant to vacate the property.
Notice to Quit
Enables, under strict conditions, a landlord or tenant to terminate a tenancy without the agreement of the other.
Null and Void
That which cannot be legally enforced, as with contract provision that is not in conformance with the law.
Off the Plan
To purchase a property before it is completed after having only seen the plans.
Offer
Conveyed intent by one party to form a contract, which may have conditions and stipulations, with another party.
Open Listing
A type of listing agreement in which more than one real estate agent may be employed to sell the property. The owner pays a commission only to the agent who finds the buyer. This listing is also known as a simple listing or a general listing and the owner is not obligated to pay anyone a commission if the owner personally sells the property.
Open Space
Land that has not had improvements such as buildings and other structures added to it. Such land is often left in a subdivision by a developer or stipulated by a local authority for recreational use or for personal use by the owner.
Option
In selling, the right (secured by a payment) to purchase a property at an agreed price on or before an agreed date. In leases, the right to renew at a mutually agreed rent.
Passed In
The highest bid fails to meet the reserve price of a property at an auction and consequently does not sell.
Public Liability
The insurance taken by companies and private individuals to protect themselves against claims made by members of the public, who might be injured in some way on the property.
Power-of-Attorney
The person who has authority to execute documents on behalf of the grantor of the power.
Private Sale
The sale of a property by the owner without the services of a real estate agent.
Private Treaty Sale
The sale of a property, through an estate agent, by negotiation.
Proxy
A person who represents another, particularly in some meeting. Also, the document giving to another the authority to represent.
Qualified Acceptance
An acceptance of an offer subject to a condition or conditions that must be met. This is essentially a counteroffer since new conditions are included.
Qualified Buyer
A buyer who has satisfied a lender that he or she is financially able to qualify for a loan. Qualifying the buyer is one of the primary steps taken by the lender as part of the loan process.
Real Estate Agent
A person licensed to negotiate and transact the sale, lease or purchase of real estate on behalf of the property owner. They work for their client by whom they have been appointed A ‘Real Estate Agent’ is appointed by the seller/vendor to represent and act in their best interests in the sale of a property. A ‘Buyers Agent’ is appointed by a buyer to act in their best interests when purchasing a property.
Real Property
Land, with or without improvements.
REIA
Real Estate Institute of Australia. National representative body of real estate agents. REIQ is the representative body in Queensland.
Reserve Price
The minimum price that a seller will accept at auction.
Restrictive Covenant
Land is sold with, perhaps, the covenant that only one home can be built upon it or that the home must be built at a specified cost or height.
Rezoning
A planning term in which the local authority can alter a planning scheme to allow, say, commercial rather than residential building.
Right of First Refusal
A provision in an agreement that gives a party the first opportunity to purchase or lease the property before it is offered for sale or lease to others.
Right of Survivorship
In joint tenancy, the right of survivors to acquire the interest of a deceased joint venture.
RTA
Residential Tenancies Authority
Sale and Lease Back
An investor buys a property and leases it back to the seller - a practice which is on the increase.
Seller’s Market
When demand for property is greater than the supply. The result is greater opportunities for owners who may find someone willing to offer the asking price or even a figure greater than the asking price.
Settlement
1. The sale of a property is finalised by the legal representative of the vendor and the purchaser, mortgage documents come into effect, costs are paid and the new owner takes possession of the property.
2. Sinking of the soil or any part of the structures, which it supports.
Site Value
The amount an unencumbered piece of land, less any improvements, is likely to realise at the time of a municipal valuation; the land component of a developed property.
Special Conditions
Special conditions may be placed on a contract and either party may or may not accept these conditions. For example: a clause may be placed on the contract to ensure all structures have final council approval. The date/s attached to the special conditions must be met or an extension of time maybe requested by either party.
In Queensland, dates on the contract - whether they are in the standard conditions or special conditions, are crucial.
Square
A square is a measurement of home area. One square = 9.3sqm approximately.
Stamp Duty
A state tax on conveyance or transfer of real property calculated on the total value of the property (including chattels).
Strata Title
A title to a unit or lot on a plan of subdivision associated with townhouses, unit and blocks of flats and based on the horizontal and vertical subdivision of air space. Owners have a certificate of title, are absolute owners of a freehold flat and have an undivided share of common property.
Subdivision
A tract of land divided into individual lots for housing development.
Survey
A drawing or map showing the precise legal boundaries of a property, the location of improvements, easements, rights of way, encroachments and other physical features.
Syndication
A group of investors (individuals or corporations) who get together to invest in a financial project requiring more capital than each one has individually.
Tenancy
The right to occupy a property under agreed terms and conditions.
Tenants in Common
A type of joint tenancy in a property where two or more purchasers own a property in unequal shares. If one dies, his or her share pass to his or her beneficiaries under the terms of the will. Contrast with co-ownership.
Title Search
A check of the title records to ensure that the seller is the legal owner of the property and that there are no other claims or liens outstanding.
Torrens Title
A system of recording property ownership where registration on the Certificate of Title guarantees ownership.
Townhouse
A dwelling unit, generally having two or more floors attached to other similar units via party walls.
Transfer
A document registered at the land Titles Office and noted on the Certificate of Title which verifies the change of ownership of a property.
Trustee
A fiduciary who holds or controls property for the benefit of another.
Under Licence
Early possession of the property before settlement with the permission of the vendor. This usually involves a payment of rent.
Underpinning
Supports placed under an existing wall to provide added strength.
Unregistered Mortgage
Not registered on the title of the property.
Utilities
The private or public service facilities such as gas, electricity, telephone, water, and sewer that are provided as part of the development of the land.
VPO
Vegetation Protection Order
Vacant possession
When a property is sold without any existing lease or tenancy agreement, it is sold with ‘vacant possession’. The property is to be un-occupied at the time of settlement.
Valuation
A written analysis of the estimated value of a property prepared by a qualified valuer.
VJ walls
Vertical Jointed walls usually constructed in wooden board and found in older style homes (also called tongue and groove)
Vendor
The seller.
Villa
A single story attached dwelling.
Void
Having no legal force or effect. Unenforceable.
Water Course
A natural stream of running water being fed by a natural source such as a stream or river.
Without Prejudice
These words, used during a negotiation, mean that any suggestion or plan put forward cannot be used as evidence later if the negotiations fall down.
Yield
The interest earned or returned by an investor on an investment, stated as a percentage of the amount invested.
Zoning
Local authority guidelines for the permitted use of land.
** This dictionary is to be used as a guide only. We are not legal professionals and make no claims to be so at all times, please seek legal advice**
Copyright 2008 Hot Property Specialists. All rights reserved.
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