Real Estate Glossary
You've probably heard most of these phrases...but just in case you don't know what they all mean, here's our glossary on the key terms you may hear when selling or purchasing a property.
| Agency Agreement | A legally binding contract |
| Appreciation | An increase in the value of a property |
| Asking Price | This is the listed price of the property. This is the price that you as a seller are asking for |
| Assessed Value | The valuation placed on a property for the purposes of taxation by an authority (also knowns as an appraisal) |
| Auction | The public sale of the property (e.g. Real Estate) to the highest bidder |
| Body Corporate | An administrative body made up of all the owners with a group of units or apartments of a strata building |
| Bank Valuation | A bank's estimate of a property's value. This is often more conservative than the actual market value |
| 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 cleared |
| Buyer's Market | When the demand for property is less than the supply so the advantage shifts to the buyer |
| Capital Gains Tax | This is a tax levied on profit from the sales of an investment property (not a family home) |
| Certificate of Title | A description of a property with the name of the registered owner |
| Clear Title | Ownership claim to an asset or property that is free of all encumbrances such as known claims, creditors and poses no question as to legal ownership |
| 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 |
| Contract of Sale | An agreement in writing setting out the terms and conditions relating to the sale or purchase of a property. It is the purchase document signed at auction |
| Cooling Off Period | The legal entitlement of a property purchaser to withdraw from a contract by giving written notice within a specific period of time after the Contract of Sale or Contract Note is signed. There are some circumstances where the cooling-off period does not apply such as buying at auction |
| Covenant | Terms, conditions and restrictions notes on title. A covenant may affect future plans or resale of the property |
| Cover Note | A document issued by an insurance company giving temporary insurance until a formal policy is issued |
| Deed | A legal document conveying title to a property |
| Default | Failure to meet an obligation when due |
| Deposit | A percentage of the purchase price given to bind the sale of real estate |
| Depreciation | A reduction in the value of property due to changes in market conditions or other causes |
| 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 |
| Encroachment | A structure which extends in while or in part over a neighbour's property e.g. a fence |
| Encumbrance | Any obstruction or obstacle related to the use or transfer of land including things such as easement, mortgages, caveats and leases which are usually registered on the title |
| Equity | The value an owner of a property has in the asset above the debt owed |
| Exchange of Contracts | The legal process that creates a binding agreement for the sale of a property in a specified time period |
| Exclusive Authority | A written contract that gives one real estate agent the exclusive right to sell a property in a specified time period |
| Executor | A person named in a will administer an estate |
| Fittings | Items not usually included in a property sale that can be removed without damaging the property and such as light fittings, washing machine, dishwasher etc. These are also called or known as chattels and can be either included or excluded in the Contract of Sale |
| Foreclosure | The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually results in the mortgagee selling the property by auction and the proceeds being used to service the mortgage debt |
| Guarantor | Someone who agrees to fulfil a contract if the main party to the loan defaults |
| Listing |
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| Market Value | The price at which a seller is happy to sell and a buyer is willing to buy. Establishing the market value is the objective of an appraisal |
| Mortgage | A legal document that pledges a property to the lender as security for payment of a debt |
| Off The Plan | To purchase a property before it is completed after having only seen the plans |
| 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 |
| Passed In | The highest bid fails to meet the reserve price of a property at an auction and consequently does not sell |
| Pre-Approval/Pre-Qualification | The process of determining how much money a prospective home buyer will be eligible to borrow before he or she applies for a loan |
| Private Sale | The sale of property by the owner without the services of a real estate agent |
| Private Treaty Sale | The sale of property, through an estate agent, by negotiation |
| Purchaser | The purchaser is the buyer |
| 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 or lease of real estate on behalf of the property owner |
| Requisitions On Title | A process where the buyer requests additional information about the title of the property from the vendor |
| Reserve Price | The minimum price of a seller will accept at auction |
| Right Of First Refusal | A provision in an agreement that gives part of the first opportunity to purchase or lease the property before it is offered for sale or lease to others |
| Seller's Market | When demand for property is greater than supply. The result is greater opportunities for owners ho may find someone willing to offer the asking price or even a figure greater than the asking price. Contrast with Buyer's Market |
| Settlement Date | The sale of a property is finalised by the legal representatives of the vendor and the purchaser, mortgage documents come into effect, costs are paid and the new owner takes possession of the property |
| Stamp Duty | A state tax on conveyance or transfer of real property calculated on the total value of the property (including chattels). This calculation varies from State to State |
| Strata Title | A title to a unit or lot on a plan of subdivision associated with townhouses, units and block 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 the common property |
| Subject to Conditions (Accepted Offer) | An acceptance of an offer subject to a condition or conditions which must be met. This is essentially a counter offer since new conditions are included |
| Tenancy | the right to occupy a property under agreed terms and conditions |
| 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 claims outstanding |
| Valuation | A written analysis of the estimated value of a property prepared by a qualified valuer |
| Vendor | The seller of the property listed |
| Zoning | An urban planning tool used by local governments to determine how land is to be used |