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Terminology

Real Estate Terminology and property jargon can get a bit confusing and may lead to you looking uninformed or potentially cause you to lose money on the sale of your house, commercial property or business. Whether you are buying or selling a home, you will have to deal with agents, property owners and consultants. In most of these cases, the parties concerned use jargon that is relevant to that line of business. It is therefore important that you understand these terms just to be sure that you are relevant in which part you play. Here are some terms that you should know more about. Have a read through our Terminology section carefully, memorise the terms below and go into your sale of your property knowing exactly what each term means so that you do not get tripped up or caught out.

A

Abutting

It means to be side by side. In real estate, it means that two properties share the same or a common boundary.

Adverse Possession

Leaving land unoccupied for an extended period of time and someone else settles on it and lives there, uninterrupted, for a long time, possession automatically moves from you over to the other person who has occupied the land. This is because land is considered to be valuable and the laws of the country are not sympathetic with people who don’t take care of it. In most states, the period is 12 years but could be slightly higher or lower in others. Fence lines, when they are not aligned with title boundaries can fall under adverse possession. A report from a surveyor can be used to settle disputes of this nature.

Adjustments

These are part of a settlement and they include any dues such as un-paid rates or rates paid but that will be refunded in part to the seller at a future date. To calculate adjustments, calculate days since rates were due until they were settled. Many people find it rather taxing to make adjustment calculations. See a real estate with this kind of expertise, a lawyer or financial advisor.

Agent

This is a person licensed under Australian (or state level) law to help individuals negotiate, as an intermediary, the sale and settlement of a property. It is a requirement in Australia that to represent anyone as a real estate agent, you must be licensed and it must be current.

Appraisal

This is an estimate of the value of a property in the current market. It is important when you are either buying or selling a home that you get an approximation of its worth so that you can know how to price it. Real estate agents are in touch with professionals who appraise properties.

Apt

Short for apartment, which is usually be associated with a larger housing unit.

AP

Short for AgentPoint. AgentPoint is the portal which your listing will be uploaded to and which allows us to export your listing out to the major Real Estate websites. You will be given a login to access this portal upon signup which will allow you to update and edit your listing at any time.

APID

This is an abbreviation for AgentPoint ID. In most cases, this is your listing reference number that we use to locate details and make changes to your listing or account if you request them.

Auction

This is the process of selling off a property to the public so long as the price that a seller has been quoted is either reached or further exceeded, whichever comes first. Note that selling your home in an auction means that contracts are signed immediately afterwards so you cannot auction while still living in your home. To seal the contract, the buyer will immediately make a down payment of 10%. If your home has attracted the interest of several buyers who look like they are really keen, you can auction it and get more than you had quoted.

Auctioneer

This is a person who conducts an auction. He has to be licensed as an auctioneer and usually, they are also licensed real estate agents.

B

Body Corporate (BC)

The letters stand for Body Corporate, which comes about when there are several titles and shared amenities or areas of property. A body corporate is responsible for all the shared areas, including making sure that they are insured and in good condition. The title holders contribute to the body corporate expenses and any shares are distributed among them depending on how much they contribute.

Body Corporate Levy

This is the fees that a body corporate will charge a title holder. This fee is used to take care of the common areas among title holders.

Bridging Finance

This is a short term loan to support the buying of a house, usually based on a sale that is yet to take place, like you would get from a bank to make down payment for a house that you plan to buy.

Buyer

This refers to the person acquiring a property through a sale, sometimes called a purchaser.

Buyers Advocate

This is a representative of someone who wants to buy a house. They are paid by the buyer and their job is to find the best house for the kind of money that the buyer has. They are usually paid only after a suitable house is found.

BR’s

Common abbreviation for BedRooms.

BIR’s

Common abbreviation for a Built in Robe.

Building Inspection

This is the process that is carried out to determine whether a building is structurally sound and whether the plumbing and electrical works are in good order. Do not buy a house that hasn’t had an independent inspection that you can trust; you are open to all kinds of financial and physical risks.

C

Caveat

This is legal documentation declaring that a person has an interest in a particular property. It is filed directly with the Land Titles office and it should be referred to when anyone else comes in showing interest in the same property.

Clear Title

This is land that doesn’t have any registered charges against it, outstanding mortgages, outstanding debts or other claims against it.

Contract of Sale

This is a legal document showing that the sale of a property has occurred. It is usually held between a buyer and a seller and although in much of Australia it is largely the same, it could change in some circumstances.

Contract Note

This is a legal document issued by a buyer to a seller which preceded the actual contract.

Conveyancing

This is legal work that comes along with buying or selling a property. It is usually undertaken by a lawyer who is trained for it.

Conveyancer

This is a licensed person who undertakes the legal work that surrounds the buying or selling of a property. If you have any legal property issues, the first person you should talk to is a conveyancer. They will appraise you as to what is and what is not legally yours.

Cooling Off Period

This is the period after a purchaser expresses interest and then changes their mind. It can be differs depending on the method that was used to sell the property.

Covenant

A signed document showing that one of the parties is willing to certain pre-agreed terms. It is not enforceable unless it is stated in the title.

D

Day of Sale

The day that the seller accepts the buyer’s offer.

Deposit

This is a portion of the sale value that is given to the seller to stop him selling the house to other buyers.

Dummy Bid

This is a false bid made at an auction. People make dummy bids for different reasons. In some states, dummy bids are illegal.

Dual Occupancy

This is a piece of real estate that allows the owner to erect two structures on it.

E

Easement

These are the rights that are held by someone to access and use another person’s property, like the water company coming in to fix pipes that run across a piece of land that belongs to you.

Estimated Selling Price (ESP)

This is the signing of a contract between a buyer and a seller and then exchanging the contracts.

Exclusive Sale Authority

This is the authority conferred upon an agent by a vendor to be their representative in all aspects of selling their property.

F

Feng Shui Consultant

Feng Shui consultant is mainly focused on making sure that you are getting the kind of results you yearn for. The consultants here carefully analyze your current environment and then offer recommendations that would help you to create a space that is more of filled with positive energy and zeal. Therefore, if you are seeking to succeed in the real estate industry working with Feng Shui consultant is not just an option but should be a major priority.

Fixtures and fittings

This refers to items such as built-in cupboards and closets, drawers, stoves, bathtubs and hot water systems. These are basically the kind of items that you cannot remove from your house without causing some damage. Therefore, if you are building a house and you are not sure about the items that should be installed as fixtures and fittings in it; you have to communicate such details to the contractor.

FHOG

FHOG is short for First Home Owners Grant. Just as the term implies, this is a government developed scheme intended to offer first time home owners financial assistance to be able to make purchases. The Australian government is an example of a government that offers its people FHOG. This comes down to individual states which also offer additional payments or other schemes to complement whatever the state is already offering.

FSBO

This is an acronym of For Sale by Owner. Just as the term suggests, this is a sale whereby the owner of the property or rather the vendor has not given an agent the responsibility to carry on the activity of searching for potential buyers on behalf of the property owner. The property owner therefore has to do the hard job all by himself. Therefore FSBO means that a vendor is willing to negotiate directly with buyers.

FSBT

Short for, For Sale By Tender, this term describes the process whereby the vendor sets a date or deadline by which interested buyers can make offers for property that they wish to buy separately. The bids are made mainly in relation to what one feels the property is worthy. FSBT normally applies to unusual or high value kind of property.

G

Guarantee

This is where one person agrees to meet legal obligations of another party should the other person default. For instance, if a property is being purchased by a company, the vendor would require a guarantee from one of the directors of the company. This means that if the company was to default payment, the director who provided the guarantee would be held liable and thus would have to complete the sale. Guarantees are serious legal obligations. Therefore, if you ever find yourself being asked for one, it is always important to seek legal advice first.

Grout

This refers to mortar which fills joints in masonry work and especially joints between tiles.

Guarantor

This is the person or party that provides the guarantee.

H

Home loans

These fall under financial assistance. In most cases they are referred to as mortgage. Home loans can be categorised as either; Variable loans – These are loans whereby the interest rates can change through the term of the loan. Economic climates have an impact on these types of loans. his means that you will be able to feel rate rises with ease. Fixed loans – On the other hand, fixed home loans are loans whereby the interest rate remains unchanged throughout the term of the loan. This means that adjustments that are made by the bank are irrelevant and do not have any effect on the home loan. These two types of home loans also feature a couple of variations. They include capped rate, split, honeymoon, bridging loans and home equity loans. Split loans allow you to enjoy the benefits of the two types of home loans. This is where one part of your loan is at a fixed rate of interest while the other is on a variable interest rate. On the other hand, capped rate loans are loans which have rates that cannot exceed a certain set percentage in a fixed period but can decrease during that period. Honeymoon loans have lower rates for first six to twelve months and then revert to standard rates as repayments decrease.

Home staging

This is the process of styling your home prior to sale to make sure it achieves the best price. This also helps to cut down on the amount of time for which your property will have to stay on the market. This aspect can be likened to face lifting and is normally used as a marketing option just in case you would like to sell your house as fast as possible and not necessarily at a compromise price.

I

IO

This is an acronym for interest only. This is a type of a loan whereby a borrower pays interest without a reduction in outstanding balance or what is commonly referred to as the principle. There are a couple of benefits that come with such types of loans. The monthly payments are much lower than the principle. You also have to make interest repayments for a single amount of a loan at the same level or interest rate. The only drawback that comes with such types of loans is that the payments that are made for servicing interest only loans don’t make any reductions in the amount of money that should be paid ultimately. There are many more terminologies that you can add on to the list. This was simply a tip of the iceberg. You have to understand most of these terms to be relevant. Just like any other facet of life, real estate players also make use of jargon in business and thus it is important to be up to date. Just be sure that you understand what you are doing in this industry.

L

Land Tax

This is a tax calculated by the state and imposed on a property. Your place of residence ay not be taxed but you should find out all the same.

LVR

This means loan to value, which the amount that a lender is willing to put up compared to the property value. It is not always that lenders give you the amount that you asked for, and they can even go as low as 80%. The better outcome would be to talk to different lenders and ask them how much they are willing to lend and then apply with the highest offer. But be careful about how much they charge in interest because this may be their trade off.

M

Mortgage

This is the process of borrowing money from a financial institution to pay for a property. You then repay the financial institution with an agreed number of years at an interest. The lender can repossess the mortgage if the loan is not paid on time. They usually sell it to recover at least part of the outstanding mortgage. Look for lenders that offer mortgages at reasonable interest rates.

Mortgage Stress

This happens when someone is under pressure from their lender to make their mortgage payments on time. The best way to deal with this is to take action. Look at your options and take the one that is least painful and remedies the situation. You can sell off the property to salvage whatever value before it gets eaten away by interest charges. You should also talk to experts; too many people lose their homes when there are experts who can give them options that will help them keep their homes.

Mortgagee

This is an institution that lends money to an individual to enable them to buy a property. You have to apply for the money, they have to assess your credit worthiness and then they decide whether they will give you a mortgage or not. Mortgagees that are quick to dish out mortgages may be very expensive in terms of interest and intolerant if you miss payments.

MIP

This stands for Mortgage in Possession. This is when the mortgagee takes possession of a mortgage because its owner cannot pay their mortgage back on time. Mortgages in possession are usually sold by the lender so that they can recover whatever amount is outstanding. On the flip side, these are good properties to look at if you are looking for a property on the cheap. Banks usually sell at auctions and they take low bids.

Mortgage Insurance

This is taken out by the bank when they are lending you money for your mortgage. They need to cover any shortfall that may accrue because you cannot repay the loan. In case you default, they file a claim with the insurance company and they are able to recover the money that you owe them. Many people think that this is insurance that you take out to help you in case you cannot make your mortgage payments. If you want this kind of a policy, talk to your insurance company about what your options are. Many people who lose their homes had no idea over the years that they could buy insurance against failed mortgage repayments.

Mortgagor

This is the person who waives their rights to a property so that they can secure the money to buy it. In other words, this is you when you sign documents with a bank for them to lend you money for your mortgage. They legally own your home and they can sell it of you fail to pay your mortgage on time. It is fair to find out how a bank handles mortgagors when they default. Some banks are more patient than others and some will even show you a way to restructure the debt so that payments are easier on you.

N

Negative Gearing

This is when a property that was intended for investment is drawing higher interest on the mortgage than it is drawing in rent. Basically, your investment is making losses. To remedy this requires that you renovate the property and increase the rent. Also, talk to your bank to find out why you are paying more in interest and ask them if they can move you to an alternative plan.

Non-Bank Lender

This is any institution that is willing to lend you money for a mortgage that is not a traditional bank. They source funds from other institutions like the capital markets or other facilities that are not open to the public. These lenders sometimes have better bargains than banks. It is wise to ask them what they have for the kind of loan that you are thinking about. Take a look at the entire package rather than what they offer you going in and sometimes interest rates increase.

O

Off The Plan

This happens when land is sold and then subdivided afterwards. The sale is registered at the Land Titles Office but the registration documents don’t indicate that it will be subdivided.

OFI

This is abbreviation for Open For Inspection, which is when a homeowner who is looking to sell opens his home to possible buyers. If you decide to sell yourself, make a lot of time for showing people around your property. This is one reason why sellers prefer to use agents.

OFP

This is an abbreviation for Open Fire Places.

OSP

Off Street Parking, a good deal if you can get it.

On The Market

This happens in auctions when bids reach the reserve price. It is declared on the market and from there on, it is be sold bidder who makes the highest bid. If you want to buy property through an auction, it helps that you hold back until the house is on the property market without revealing how much you want to spend. An auctioneer is legally required to tell you if it is when you ask, so ask because it may be time to place your bid.

Over Capitalised

This is when the total of money spent acquiring a property is more than the property value. Most cases of over capitalisation happen when a buyer realises that they have to spend a lot of money in renovations which in essence pushes the buying price up. If you find yourself in this situation, aim to minimise your losses by getting a professional in to help cut costs but do effective renovations. Another tip is to never buy a property before an independent inspection has been done to determine its soundness. Look for structural as well as any other kind of damage.

P

PI

This is short for Passed In. If a property on auction does not sell, it would have to be passed in to the highest bidder. After that, negotiation starts with that bidder. If the property vendor does not reach an agreement with the highest bidder, anyone who is interested in the property can join in the negotiations. This would however only happen once that auction dates have passed.

P&I

This is an acronym for Principle and Interest. This is a type of a loan where the principle loan amount and the interest rate have to be paid over the entire life of the loan. This type of a loan comes with a number of benefits. For instance, the outstanding loan balance reduces over time even as periodic payments continue to come in.

Power of attorney

Just as the term suggests, this is a legal document which someone signs so as to give authority to another party to act on his/her behalf. A power of attorney document can be specifically worded so as to address a certain kind of transaction or issue. On the other hand, it can also be general and thus usable for all types of affairs. If there are any real estate or property transactions that you are following up today and you are planning to travel overseas soon, it might be a good idea to use the PoA document to delegate power to another party. This is the document that will continue working for you even when you are away. As long as you have given authority to someone or company that you trust, you can rest assured that your transactions will be completed in a timely manner.

Private treaty

This is one of the many ways through which people buy and sell property. Therefore, if you are thinking of selling your house soon, this is something you ought to understand. A private treaty is an arrangement whereby there is an asking price and the property is sold through negotiation.

Private sale

When a house or any other kind of property is sold through private negotiations only between the vendor and the buyer, this is referred to as a private sale. This method is much different from an auction since the property is not advertised or offered for sale on a particular date. All the transactions are carried out by the two concerned parties in confidence. A private sale gives a vendor the opportunity to negotiate over time with potential purchasers without necessarily having to commit himself to sell on a particular day as the case is for auctions. Again, this option allows the vendor to sell property discreetly and in privacy unlike the case would be if they were selling at public auctions.

Rates

This refers to quarterly, annual, half-yearly or monthly payments that have to be made to local councils for such amenities like garbage collection, water, and sewerage. On the other hand, you can include levies intended for the improvement of roads and parks in this category. In many instances council rates are seen as some form of taxation. That is why property value plays a major role in determining how much someone would pay as rates. That perhaps explains why many people choose to sell their properties when the value goes up. Most of them are wary of the ever escalating council rates. Adjustment of rates is normally a critical part of a settlement process. This means that rates that have been paid already would be refunded partially or unpaid rates on property will have to be paid as a part of the settlement.

R

Reserve price

This is the minimum price at which the vendor will sell his property at the auction.

S

Settlement

This is where the buyer pays the amount due for purchase or the balance owed and then becomes the legal property owner.

Skylight

A window installed in a roof so as to allow natural light to come into the room.

Sole agency agreement

This is much similar to an exclusive agreement but the only difference is that in such a case, the owner can sell in private without having to pay any agent fees.

Solicitor

This is person who is qualified to carry out law practice. The person ought to hold required professional indemnity insurance and a relevant practicing certificate.

SP

This is short for Sold Prior. This is whereby a vendor sells property prior to action date.

Stamp Duty

This is the money which the government requires someone to pay when registering the transfer of a land document when settlement has been completed. The stamp duty amount is determined by the value of the property.

STCA

Subject to Council Approval is a term used where there might be the possibility of obtaining council approval for development of property. STCA does not necessarily mean that permits for development proposals are all in place. You might have to check with your lawyer to know whether your permits are well in place.

Strata Title

This refers to a property title case where there is more than one owner of a piece of land. Most high rise apartments feature such kinds of titles and are embodied in body corporate.

Subject to tenancy

This is used to describe where a piece of property has been sold and the property has been occupied by tenants who will be paying rent to the property owner. If the property was purchased for investment purposes, the buyer might wish to gain full tenancy.

T

Title

Refers to the legal ownership of the property, as the owner has title to it, and only this person will be able to legally sell it.

V

Vacant Possession

A vacant possession refers to any piece of real estate that is vacant at the time the purchase is agreed and final settlement takes place.

Vendor

The term vendor is what is used in legal contracts to refer to the person, company, or other party that is selling the property. When buying a property, it is essential that you make sure the vendor’s name on the contract exactly matches the name on the corresponding Certificate of Title. If the two do not match, then you will need to have them prove otherwise that they have the legal right to sell the property, such as a Power of Attorney document from the person whose name is on the title.

Vendor’s Advocate

A vendor’s advocate, or seller’s advocate as it’s often known as, is a person who works with the vendor when negotiating the sale terms with the purchaser.

Vendor’s Statement

A document stating all pertinent information about the property that must be shared with any potential buyer before a contract of sale can be entered into. The vendor’s statement usually includes information about the title; council rates and other taxes, charges, and fees; any applicable body corporate details; and other items which may affect the property such as building or development approvals. It is up to the vendor to ensure the information complies will any relevant requirements, is accurate, and not more than three months old. If not, then the vendor’s statement could be considered grounds for cancelling or renegotiating the terms of the sale. For this reason, it is recommended that you have a solicitor help with drawing up the vendor’s statement in order to avoid any problems or issues that might otherwise arise in the future.

W

Water Closet (WC)

Refers to the room housing the toilet, which is normally just listed as WC on blueprints.

Walk In Robes (WIR)

Refers to walk in wardrobes or closets, which are often just abbreviated as WIR on blueprints and property listings.