The world of property can often feel like a maze, complete with its own unique set of twists, turns, and language. To a novice, it might even seem like a completely different universe, with a myriad of jargon that can seem almost alien. But fret not, this guide will serve as your trusty translator and road map through the labyrinth of real estate terminology. Whether you’re a seasoned investor, an aspiring homeowner, or a curious bystander, gaining an understanding of these terms will empower you in your real estate journey.
An agency agreement, also known as a listing agreement, is the contract between the property vendor (seller) and the real estate agent. It stipulates the conditions under which the agent will sell the property. Once the property is sold, the agent receives a commission, and the settlement takes place – this is the final step in the sale when the property changes hands, and all payments are made.
In the process of purchasing a property, the buyer may come across terms like conditional agreement and deposit. A conditional agreement is one where the sale of the property depends on certain conditions being met, like securing financing from a lender. The deposit is a portion of the purchase price paid upfront.
An exclusive agency agreement allows one real estate agent exclusive rights to sell a property. This differs from an open listing, where multiple agents can market the same property, and the first to secure a buyer earns the commission.
In some cases, a guarantor may be required. This is a third party who guarantees to repay the loan if the borrower is unable to. A home equity loan, on the other hand, allows homeowners to borrow money using the equity in their home as collateral.
An interest-only loan is a type of loan in which the borrower only pays the interest for a certain period. Meanwhile, joint tenancy refers to an arrangement where two or more people co-own a property with equal rights, and if one owner passes away, their share of the property automatically passes to the surviving owner(s).
Lessee and lessor are terms used in lease agreements. The lessee is the tenant who rents the property, and the lessor is the property owner who leases out the property.
A mortgage is a loan taken out to buy a property. The borrower (mortgagor) repays the lender (mortgagee) in regular installments. The LVR (loan to value ratio) refers to the amount of the loan as a proportion of the property value.
An offer is a proposal to purchase a property, and when this is accepted, a sale and purchase agreement is drawn up. This legally binding contract outlines the conditions of the sale.
When the highest bid at an auction fails to meet the reserve price, the property is “passed in” and does not sell. In contrast, the RV (rateable value) is used to calculate local body rates.
Settlement, the final stage in a property transaction, involves the exchange of property and payment. A title provides information about a property’s ownership, boundary, and access.
An unconditional agreement is where a sale and purchase agreement has no attached conditions. Meanwhile, a valuation report provides an estimate of a property’s worth in the current market.
A zoning guideline determines the permitted use of land in specific areas. This is governed by the local authority.
And there you have it – an A-Z of the most commonly used terms in the world of property!
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While it might initially seem like a bewildering language to learn, once you’ve mastered these key terms, you’ll be well-equipped to navigate your real estate journey with confidence. Remember, understanding these terms isn’t just about sounding knowledgeable – it’s an essential part of making informed decisions and achieving your real estate goals. Now, whether you’re evaluating a property, negotiating a sale, or scrutinising a lease agreement, you can do so with the assurance that you understand the lingo. Happy property dealing!