Real Estate Jargon Buster
"The single biggest problem in communication is the illusion that it has taken place." George Bernard Shaw
Have you ever looked at a Real Estate sales-person or solicitor and thought "I see your mouth moving but I don't understand anything you are saying"? Here is a Jargon buster that might help you.
Agent or licensee
A person who is lawfully authorised to act on behalf of a principal to perform certain specific activities which affect the principal’s rights and duties in relation to a third party. The agent must have a written authority from the principal to act as his or her intermediary. (Many licensees refer to themselves as the principal).
Annual Percentage Rate (APR)
APR the total cost of a loan, including all costs, interest charges and arrangement fees shown as a percentage rate and easily comparable with mortgage interest rates.
Appointment to Act
This is the paperwork completed by the vendor and the selling agent that details the terms of the listing and eventual sale. The authority is valid for a set period of time. Queensland forms must be used Form 6 Sales/Purchase or Form 6 Property Management.
Real and personal property in which a person has an unencumbered ownership or equity and which has value.
The sale of a property to the highest bidder.
A licensed person authorized to carry out a sale by auction. The Auctioneer must have an Auctioneer’s license in accordance with the Property Agents and Motor Dealers Act 2000.
A basic survey of a property to estimate its value for mortgage purposes. Mortgage lenders will insist on this before lending.
Basic Variable Mortgage Rate
Mortgage lender’s standard rate of interest which may be increased or decreased periodically by the lender depending on prevailing economic conditions.
Under the latest type of legislation relating to Villas, Town Houses, Flats and Home Units, 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 properties of the units are the only members of the Body Corporate. The rights and obligations are fixed by schedules by-laws.
A temporary loan providing financial cover which a purchaser to complete on the purchase of a new property before selling the previous property.
The person who acquires title to a property or an interest in the property, (sometimes called purchaser) also known as customer.
Buyers appoint agents to act for them to source a property or bid at auction. It is lawful for there to be two agents in a transaction, one acting for the seller and one acting for the buyer. Both will be paid a commission.
This is where a large number of people are wanting to sell their properties, but the number of buyers is relatively lower.
The amount of the loan on which interest is calculated.
Literally means beware! In real estate, it warns (prospective purchasers, mortgagees etc) who purpose to deal in the land that a third person (normally the person lodging the caveat at the Registrar or Titles Office) has some right or interest in the land.
The party from whom the real estate agent has an appointment to act from. This is normally the seller or landlord but can also be the buyer or tenant.
Remuneration of a real estate agent for service rendered, eg. to effect the sale of property. The amount being a prescribed percentage based n the consideration of the contract or agreement.
The point at which all transactions concerning the property’s sale are concluded and legal transfer of ownership passes to the buyer.
Conditions of Sale
The details which determine the rights and duties of the buyer and seller. These may be national, statutory, or the Law Society’s conditions.
A legal agreement between the seller and buyer of a property which binds both parties to complete the transaction.
Contract of Sale
An agreement relating to the sale of property, which expresses the terms and conditions of sale.
A qualified individual such as a solicitor or licensed conveyancer who deals with the legal aspects of buying or selling a property.
Traditional term for the legal work involved in the purchase and sale of a property.
Cooling Off Period
For a relevant contract, means a period of 5 business days –
a) starting on the day the buyer under the relevant contract is bound by the relevant contract or, if the buyer is bound by the relevant contract on a day other than a business day, the first business day after the day buyer is bound by the relevant contract; and
b) ending at 5pm on the fifth business day.
Comparative Market Analysis (CMA)
A method used to ascertain market value of a property by comparing it to similar properties that have recently sold and others that are currently for sale.
Legal title documents proving ownership. The deeds will be held by the mortgage lender.
A sum of money (usually 10%) paid by the buyer on exchange of contracts.
Term used to describe a property that stands alone and is separated from all others.
A newly built residence or an older property which has been refurbished and modernised.
Development Application (DA)
Is a proposal to council to develop a parcel of land.
Fees paid by the buyer’s solicitor on the buyer’s behalf such as stamp duty, land registry and search fees.
Paying off a mortgage.
The difference between the value of a property and the amount of mortgage owed.
Charge passed on to the buyer by the lender for arranging a loan.
An exclusive agent is entitled on the sale of a particular property and in accordance with the terms of an agreement with the seller of the property, to receive an agreed commission or other reward, whether or not the selling agent is the effective cause of the sale.
A self-contained dwelling unit in a multi-unit dwelling.
Fixed Rate Mortgage
A mortgage in which the interest rate is set for an agreed period of time.
Fixtures & Fittings
All non-structural items included in the purchase of a property.
Technical word for the ownership of the property, meaning that it belongs to the owner without limitations of time.
The lender may sometimes require a borrower to appoint a guarantor. This is someone who promises to pay the borrowers debt if the borrower defaults.
A building, relic or landscape of such significance for past, present, or future generations that it is deemed worthy of being preserved. Heritage listed properties are subject to strict conditions regarding renovations or modifications.
A real estate property which a person would purchase with the intent of renting or renovating to get a return on his money.
A person who invests money into a business enterprise or real estate venture with the intention of obtaining a satisfactory financial return on the capital invested.
A form of ownership for two parties whereby if one of them dies, their share of the property will automatically transfer to the remaining party, giving them full ownership (regardless of the terms of the decreased owner’s will)
Land Tax/Transfer Duty
Is payable by the owner of any interest in freehold land in Queensland if the aggregate relevant unimproved value of all land interest at midnight 30 June exceeds the threshold. The Office of State Revenue (OSR) collects land tax in Queensland and administers the Land Tax Act 1915.
The person who wishes to lease or rent his/her property – may also be refereed to as the lessor.
Something that somebody is obliged to do so is responsible for. In financial terms, it usually refers to an amount owed by a creditor.
The person who is licensed under the relevant state act to be in bona fide control of the real estate office.
The recording of properties as being available for sale or rent. Also used to denote the property so listed.
Loan to Value Ratio – LVR
The size of the mortgage as a percentage of the property’s value.
Local Authority Search
Procedure whereby a buyer’s solicitor makes an enquiry to the local council regarding any outstanding enforcement or future development issues which might affect the property or immediate area.
A real estate agent authorised to manage the business affairs in connection with the property of another.
An amount of money advanced by a lenders interest in the property and containing the terms of the mortgage.
Refers to when a bank or lending institution takes possession of a property and offers it for sale due to non-payment of scheduled loan repayments. This is possible because the lender’s interests are protected by registering a mortgage against the property as security for repayment of a loan. A mortgage is a document, which secures the borrowings of the owner from a lender.
A legal document relating to the mortgage lenders interest in the property and containing the terms of the mortgage.
An insurance policy that mortgage lenders may require buyers to pay for if their loan is above a specified proportion of the purchase price.
Mortgage Payment Protection
This standard designed to pay your monthly mortgage for a limited period usually a year if you are unable to work through illness, disability or redundancy.
The standard variable interest rate quoted by all mortgage lenders which normally varies with The Reserve Bank Cash Rate. All discounted rates are based on this mortgage rate.
The period of time over which (repayment mortgage) or at the end of which (endowment mortgage) the loan is to be repaid.
The lender of a mortgage (i.e.: bank or building society).
When two parties have made an offer on the same house. The vendor will sell to the offer of best price and conditions of the contract.
When the value of the property falls below the outstanding amount of a mortgage.
Having possession of a property. Physically taking and holding it and residing thereon as a tenant or owner.
A sum of money that the buyer offers to pay for a property.
Independent professional bodies who investigate complaints on behalf of customers against, for example, estate agents, solicitors and insurance companies.
Is a written agreement entered into between a seller and a real estate agent under which the person appoints the selling agent in accordance with the terms of the agreement to sell the stated property. The seller can appoint additional real estate agents as selling agents to sell the property on terms similar to those under the agreement.
Open Market Value
The price a property would achieve when there is a willing buyer and willing seller.
To spend too much money on something, i.e. to spend an amount on something that when added to the price of the original purchase, the overall cost exceeds the current resale value.
If a property is not sold as auction because the owner’s reserve price has not been reached, it is passed in. Further negotiations may take place with highest bidder afterwards.
Power of Attorney
A legal authorisation giving one person the authority to act as an agent or attorney for another.
The initial enquiries about a property put forward to a seller which the seller must answer before the exchange of contracts.
The person from whom the agent receives instructions, and on whose behalf the agent acts. The principal is usually the seller (sometimes called vendor) or landlord, and is also the person who pays the agent for services provided.
Refers to a home that is being offered for sale to the public by the vendor with no agency involvement.
The sale of a property where the agent is appointed by the vendor to advertise the property for a price and facilitate negotiations between the buyer and seller to complete the sale of the property. This method of sale excludes auctions and tenders.
Property Agents and Motor Dealers Act 2000 (PAMDA)
The Queensland legislation that regulates Real Estate Agents and Real Estate transactions.
The process by which an agent inspects a property and researches current market trends to come to an approximate market price for the property.
Public Liability Insurance
Insurance which covers injury or death to anyone on or around your property.
A person who is buying a property.
To determine that a person is a serious and financially capable buyer.
Real Estate Agent
A person who is licensed to own, operate or manage a real estate business. The agent also accepts responsibility for the operation of his/her entire agency and staff, in accordance with the provisions of the Property Agents and Motor Dealers Act 2000.
Real Estate Salesperson
A person who is registered under requirements of the Property Agents and Motor Dealers Act 2000 act to be employed by an agent to carry out any of the functions of a real estate agent.
When a mortgage is fully repaid.
This means a contract for the sale of residential property in Queensland, other than a contract formed on a sale by auction
This is the lowest price at which someone is willing to sell their property when it is auctioned. Buyers are not told what the reserve price is.
Return on Investment
This term refers to the amount of money you could hope to receive as a result of the investment you have made. Eg, spending $1000 on new carpeting may give you a $5000 return on that investment when you sell the home.
Refinancing a property by either switching a mortgage from one lender to another or by taking out a second mortgage to draw down any equity gained by a rise in value.
The person who wishes to sell his or her property, (sometimes called the vendor) – also known as the client.
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.
If a sale was subject to a sole agency the selling agent would not be entitled to the commission or other reward if the seller were the effective cause of the sale.
Legal expert handling all documentation for the sale or purchase of a property.
A tax paid by purchasers of property to the Land Registry to register ownership of a property.
A system of land titled based on horizontal subdivision of air space. In practice, plans of a building are registered, containing internal units marked as to their boundaries, and each allocated a lot number as in a plan of subdivision. This system is used to provide a certificate of title for each unit within a residential, commercial or factory building.
Subject to Contract
Words to indicate that an agreement is not yet legally binding.
An arrangement whereby you can increase or decrease you mortgage repayments.
A property which forms part of a connected row of houses
Documents showing the legal ownership of a property.
To check the title records to identify liens, encumbrances and ownership rights to Real Estate Property.
A dwelling unit, generally having 2 or more floors and attached to other similar units in a row via party walls.
The land registry document that transfers legal ownership from seller to buyer.
A status of a property for sale when a contract has been submitted and agreed upon by seller and buyer.
The status of a property for sale, when a seller has accepted an offer from a purchaser but prior to exchange of contracts.
To give up occupancy; to make vacant; to move out of property.
A basic survey of a property to estimate its value for mortgage purposes. Mortgage lenders will insist on this before lending.
Variable Base Rate
The basic rate of interest charged on a mortgage. This may change in reaction to market conditions, so your monthly payments can go up or down.
The legal name for a person selling a property.