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a glossary of real estate terminology

AGENT

An individual authorised to act on behalf of another (usually the owner) to sell, buy, rent or manager a property. Commonly used to refer to licensees whilst individual sales representatives can be referred to as real estate agents or real estate representatives.

AMORTISATION PERIOD

The number of years it will take for you to completely pay off your loan.

APPRAISAL

It is a licensed real estate agent’s opinion of the potential saleability and price of your property. Not to be confused with a valuation, it is a prediction based on sales evidence and comparable properties on the market.

APPRECIATION

An increase in 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.

BUILDING INSPECTOR

An authorised person responsible for checking a property to ensure that it is structurally sound.

CAPITAL GAINS

Defined as the profit on the sale of a capital asset (in this case a home).

CAVEAT

A notification on the title declaring a party other than the owner may have an interest in the property.

CONJUNCTION

When two agents work together to achieve the successful sale of a property. Upon settlement, the selling fee is then shared between the two agents.

–      As a seller, it is important for you to know that not all agents allow conjunctions. Instead, some agents place restrictions upon conjunctions in order to avoid sharing their selling fee. When selling your home, we therefore recommend you discuss a willingness to conjunct with your agent of choice before signing the listing agreement.

–      As a buyer, the importance of a conjunction relates to good old fashioned service. Given that buying a home is often an unnerving experience, working with a trusted professional will make the buying process a lot less daunting.

COUNTER OFFER

A variation made to the original offer as part of the negotiation.

DEPRECIATION

A decrease in value.

FITTINGS

The items in a home that can be removed without damage to themselves or the property. These include electrical items like fridges and washing machines that are not typically included in the sale of a property.

FIXTURES

The items permanently fixed to a property that would cause damage to themselves or the home if they were to be removed. These include items like built-in shelving or carpets that are typically included in the sale of a property.

GUARANTOR

Someone who agrees to fulfil a contract if the main party to the loan defaults.

INTEREST

The amount paid by an individual borrowing money from a lender in addition to the main amount borrowed aka the principal. The interest rate can be fixed, variable or a combination of the two.

LISTING

Commonly used by agents for properties that they have been instructed to sell or lease. When real estate is ‘listed’ it is officially recorded as being available for sale.

NEGATIVE GEARING

When the earnings from an investment property are less than the costs associated with the investment. The shortfall can be used to offset tax liability in Australia (for now at least).

OFFER

The consideration offered to purchase or lease a property.

SETTLEMENT

This is the final stage of the sale process where the buyer completes the payment of the contracted price to the seller and takes legal possession of the property.

SETTLEMENT AGENT

The party that handles the legal transaction of the property from the seller to the buyer. Each party must choose a settlement agent to represent their interests during the settlement process.

SETTLEMENT DATE

The date on which the sale of a property is finalised. The buyer pays the seller and gains ownership of the property.

STAMP DUTY

Calculated as a percentage of the value, it is the tax levied on the sale of a property. This varies between states or territories.

SUBDIVISION

A land owner’s division of all or part of their parcel of land into separate allotments, each with a separate title as approved by planning authorities.

TENDER

The sale of an asset through seeking written bids.

TITLE

Generally referred to as the certificate of title, this is the document that verifies the property ownership. Normally associated with a diagram or plan that outlines the dimensions and location, it shows any encumbrances or easements specific to the property.

TRUST ACCOUNT

The bank account managed by a real estate agency where funds (such as deposits and rental monies) are held on behalf of a client.

VALUATION

An estimation of the value of a property that’s provided by a licensed valuer for legal or banking purposes.

ZONING

An urban planning tool used by local governments to determine how land is to be used. For example, this dictates if it can be used for one home, more than one home, business or residential.

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