Remember that first day on a new job when it sounded as if your colleagues were speaking a different language?
Most industries have their own jargon and real estate is no exception.
Today we’re going to help you master this language by defining some of the most common terms you’ll hear throughout the process of buying or selling a home.
Soon you’ll be using this jargon as if you were a real estate pro!
Here are Some Common Real Estate Terms Explained
APPRAISAL – An opinion of the potential saleability of a residential property by a licensed Real Estate Agent.
(In the USA an Appraisal is performed by an Appraiser and means what Australians call a Valuation performed by a Valuer.)
ASKING PRICE – The listed price of a property, but may not always be the sale price. The owner may be willing to negotiate.
AUCTION – A sale usually in public, by an auctioneer, in which property is sold to the highest bidder.
BANK VALUATION – This is a written estimation of the value of the property, carried out by a qualified Bank Valuer.
BUYER – The person buying a property. Also referred to as a purchaser.
BUYER’S MARKET – The condition which exists when, under competitive conditions, the pressures of supply and demand are such that market prices are at a relatively low level, giving the buyer an advantage. An over-supply causing prices to decline.
CAVEAT EMPTOR – ‘Buyer beware’, that the risk in a property transaction lies with the purchaser.
CERTIFICATE OF TITLE – A document issued under the Torrens System of Title, showing ownership and interest in a parcel of land. It may also include the size of the land and whether there are any limitations on the title such as mortgages, easements or encumbrances.
CHATTELS – Moveable personal property or furniture. Items such as machinery, implements, tools, furnishings, fittings, which may be associated with land use, but which are not fixed to the land or premises or, if fixed, may be removed without causing structural damage to a building.
CLIENT – One who engages the services of an agent or Valuer and to whom the agent or Valuer should look for payment of his commission or fees, in return for services rendered.
COMMISSION – The fee or payment made by the seller to an agent for services rendered, such as the sale of property, often calculated with reference to the value of the property, contract or agreement. It is usually a percentage of the selling price of the property. The amount of commission is negotiable between the seller and the agent.
COMPARATIVE MARKET ANALYSIS – CMA – A service normally provided by real estate agents prior to listing a property. The true purpose of a CMA is to establish a current estimated market price of a property. This is accomplished by researching both: the currently listed properties and the most recently sold properties, in the same area, with as similar characteristics as the property in question. This information is usually provided to the homeowner to help them establish a fair market selling price or it may be given to a prospective purchaser to help guide them in a proper offer to make the owner. Some real estate agents perform this service for free others may charge for this information. A lot depends on both who is doing the CMA and also how detailed the information that is provided.
COMPARABLE SALES – Recent sales of similar properties in nearby areas and used to help determine the market value of a property.
CONDITIONAL OFFER – An offer to buy a property, subject to something else happening – such as obtaining loan approval.
CONDITIONS OF SALE – The conditions applicable to a sale contract made between a vendor and purchaser.
CONTINGENCY – Usually called Subject-to-conditions. A condition that must be met before a contract is legally binding. For example, home purchasers often include a contingency that specifies that the contract is not binding until the purchaser obtains a satisfactory home inspection report from a qualified home inspector.
CONTRACT – A legally binding agreement.
CONTRACT OF SALE – An agreement relating to the sale of property, which expresses the terms and conditions of sale. A legal document usually prepared on the seller’s behalf by an agent, solicitor or conveyancer that outlines the details of the sale. The contract of sale is legally binding when signed by both parties.
CONVEYANCER – A person (not a legal practitioner) who prepares conveyancing instruments for fee or reward for the purpose of transferring property from the vendor to the purchaser. A legal practitioner is also allowed to engage in conveyancing work.
COOLING OFF PERIOD – A short statutory period after the contract is made, during which the purchaser may cancel the contract unconditionally. Usually, does not apply in the case of auctions.
In South Australia, this period extends to the end of two clear business days from the making of the contract or the service of Form 1, whichever is later.
COUNTER-OFFER – A new offer as to price, terms and conditions, made in reply to a prior unacceptable offer. Normally a counter-offer offer terminates the previous offer.
DEPOSIT – A percentage of the purchase price paid by the buyer when contracts are signed and exchanged. It is usually ten percent. The deposit must be held in a trust account by the land agent or by the vendor’s solicitor or conveyancer or held jointly in a trust account by the vendor and buyer. (See also Holding deposit.)
EASEMENT – A right to use the land of another (not involving the taking of any part of the natural produce of that land, or any part of its soil) or a right to prevent the owner of that land from using that land in a particular manner. Most commonly used where Government authorities have the right to run, for example, electrical mains, drainage, sewerage or right of way through the private property.
ENCROACHMENT – The use of, or intrusion onto, another person’s property without consent. This usually refers to a structure.
ENCUMBRANCE – A charge or liability on a property; for example, a mortgage or a special condition on the use to which it may be put (e.g. easements, caveat, restrictions and reservations). A third party’s right that obstructs the use or transfer of a property.
ESTIMATED SELLING PRICE – The price an agent estimates a property will attract. It must be recorded on the sales agency agreement as a single figure.
EXCLUSIONS – Any item that is specifically not included in the sale. e.g. An above ground pool, garden shed, etc.
EXCLUSIVE AGENCY AGREEMENT – The agreement between an agent and a vendor establishing an Exclusive Listing.
EXCLUSIVE LISTING – Where a single agent only is appointed to sell or lease a property under an Exclusive Agency Agreement.
FIDUCIARY DUTY – The relationship between a real estate agent and a client is called a fiduciary relationship. Fiduciary means faithful servant, and an agent is a fiduciary of the client called the principal. In real estate, an agent can be the agent of a seller or a buyer but not both.
Agents usually act in the sellers’ best interest with the authority of a Sales Agency Agreement which sets out their duties and responsibilities. It is one based on trust.
Here’s are some of the fiduciary duties that an agent owes the client. Care: The agent must use all their skills to the best of their ability on behalf of the client. Confidentiality: The agent must keep confidential any information given to them by her client, especially information that may be damaging to the client in a negotiation. Disclosure: The agent must disclose to the client any information they receive that may benefit the client’s position in a negotiation. Loyalty: The agent owes undivided loyalty to the client and puts the client’s interests above their own. Obedience: The agent must obey all lawful orders that the client gives her.
FIDUCIARY RELATIONSHIP – One of trust and confidence in which the agent owes the client certain duties. These include care, obedience, loyalty, disclosure, accounting, and confidentiality. In real words, the agent’s fiduciary responsibility to their client means, your goals and interests are what we work for. This is a legal relationship, with legal requirements.
FINANCE BROKER – Helps borrowers by providing expert information in comparing the many loans available in the marketplace. A qualified broker looks at the client’s specific needs and circumstances and should be able to interpret which type of loan best suits their client and why. They should actively follow through on a borrowers’ application every step of the way.
FITTINGS – Items which can be removed without damaging the property such as garden ornaments, lighting and air conditioners. They must be listed in the contract of sale if the buyer wants them to remain with the property.
FIXTURES – Items, which are attached to the property and cannot be removed without causing damage to the property such as bathroom suites, carpets, window fittings, built-in wardrobes and kitchen stoves. They are usually included in the sale.
FORM 1 (Vendor’s statement) – Information which the seller must provide to the buyer advising of restrictions such as easements and outgoings such as rates, and any other notices.
HECTARE – The metric measure for an area of land measuring 10,000 square metres (approximately 2.471 acres)
HOUSE – A single, self-contained place of residence detached from other buildings. A house generally consists of enclosing walls with a roof to shelter occupants against both climate and intruders.
IMPROVED LAND – Any permanent development made to the raw land which increases its usability, such as the installation of water utilities, sewer, roads and building structures and thereby increase its market value.
IMPROVEMENTS – Anything that is constructed or built on land to increase its original value. e.g. such as a house.
INCLUSIONS – Usually fixtures such as lights, curtains, blinds, ceiling fans, air-conditioning units, flyscreens, TV antenna, dishwasher, range hood, stove, fixed cupboards, clothes hoist or any other removable item that the vendor has agreed will be included in the sale.
INDEFEASIBILTY OF TITLE – The description given to the immunity a registered proprietor of land under the Real Property Act enjoys from attack by a competing claim to the land by some other person.
INVESTMENT PROPERTY – Property, either land or a building – or part of a building – or both. Held by the owner or by the lessee under a finance lease to earn rentals or for capital appreciation or both.
JOINT TENANTS or TENANCY – The ownership of land in common by several persons where there is a right of survivorship i.e. where on the death of one joint owner the land as a whole, vests in the survivors.
KNOCK DOWN – The term is used to refer to a property that is in a poor condition and which cannot be restored. The only solution is to demolish and rebuild.
LAND – The part of the Earth not covered by water. Land can be owned as property or held for productive use, generally, however, the land is the specific bounded area on which an owner has an interest in which that owner may build upon, farm or simply leave vacant.
LANDS TITLE OFFICE – The lands title office or lands registration office established by statute administers the provisions of the Real Property Act.
LET OUT CLAUSE – Also known as 48 HOUR CLAUSE – This clause is inserted if you are making an offer that is conditional upon the sale of your existing property, but the seller wants to continue marketing their property in the hope of receiving an unconditional offer. Within the 48-hour clause, the seller has the right to continue advertising their property and to negotiate with a potential second buyer. If the seller receives an alternative offer they wish to accept, they must notify you of this. You would then have two business days to secure an alternative source of finance or obtain a contract for the sale of their existing property. If you do not waive the condition before the two days are up, then the contract comes to an end and your deposit will be returned. The seller is then able to enter into a contract with the alternative buyer. We strongly encourage buyers and sellers to fully understand the terms and conditions before agreeing to it.
LOT – A lot or block subdivided from a larger portion of land. Also referred to as an allotment.
MARKET APPRAISAL – An opinion of the saleability of a property and its value without carrying out a full-scale valuation. Also, see Appraisal.
MARKET PRICE – The price actually paid, or agreed to in a contract to be paid, for an asset. It differs from the market value in that it relates to an accomplished fact, whereas market value is and remains an estimate until proved. The Market Price may involve circumstances not normally included in the market value.
MARKET VALUE – Market value is the estimated amount for which an asset should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing, wherein the parties had each acted knowledgeably, prudently and without compulsion.
MARKETING – In a nutshell, is the megaphone for your listing – it screams to the world that your property is for sale, that it’s worth taking a look at and why it’s better than the competition. Our ‘Marketing Machine’ guarantees your place gets seen.
MEMORANDUM OF TRANSFER – A document that records the change of ownership of a property from the vendor to the buyer.
MORTGAGE – Documentation of a property loan. Security over real property to ensure payment of a debt or performance of an obligation. Property held as security against a loan.
MORTGAGEE SALE – Sale of a property where, in the case of a default of payments by the mortgagee, the mortgagor can sell the property over which the mortgage has been held. (Referred to as a Foreclosure in the USA)
NATIONAL ELECTRONIC CONVEYANCING PROJECT – Australia’s joint government and industry initiative to create an efficient and convenient way of completing property based transactions and lodging title dealings for registration.
NEGOTIATION – The process of discussions between buyer and seller, which are usually handled by the agent.
ON THE MARKET – The point at an auction where a price is reached at or above which the seller is prepared to sell. This is not always indicated at auctions. So do not expect it always to be called out if you are bidding.
OPEN HOUSE – OPEN INSPECTION – An occasion when a house that is for sale is presented for prospective buyers to see or inspect. The house is left open, supervised by an onsite selling agent, for a specified period of time at a fixed advertised time. Tips 1 Tips 2
PASSED-IN – If a property is not sold at auction because the owner’s reserve price has not been reached, it is passed in.
PEST INSPECTION – A thorough inspection by a certified Pest Inspector to check for the current or prior presence of pests such as termites.
PRIVATE SALE – Where an owner offers a property for sale without engaging an agent. Here is a better Option.
PRIVATE TREATY SALE – A sale negotiated directly between the parties or their agents through private negotiations and contract.
PROBATE – The official grant of the court to an executor of the right to deal with the property of a deceased person. The executor proves the will and receives a grant of probate.
PROPERTY – At law, property consists of the private rights of ownership. To distinguish between real estate (realty), a physical entity, and its ownership, a legal concept, ownership of land is known as real property. Physical items other than real estate are legally termed ‘personality’ and their ownership is known as ‘personal property’. The word ‘property’ used without further qualification or identification may relate to real estate, personality or a combination. Colloquially, property is anything that can be owned or in which an interest can be held, over which control can be exercised, which can be traded or left in an estate or from which current or future rights to receive benefits can be held. Property can include but is not limited to, real estate and associated interests therein, personality, intellectual property, rights, licences and options, plant and machinery, art and jewellery, goodwill and shares.
PROPERTY INTEREST REPORT – PIR – The property interest report gives clients information about various State Government interests for all properties in South Australia. This information, along with details of interests delivered directly from state government agencies, is used to complete the required Form 1 given to purchasers of real estate prior to property settlement.
The Land and Business (Sale and Conveyancing) Act 1994 and regulations are set in place to provide consumer protection for those purchasing property in South Australia. Section 7 of the act identifies the requirement for a statement of government interests to be served by a vendor or their agent, on a purchaser prior to settlement in the required Form 1.
The property interest report comprises the following items:
*report listing the necessary particulars to assist with the completion of Form 1 for the sale of a property
*title and valuation details and a check search providing details on any registered or unregistered dealings lodged within the previous 90 days
*a copy of the certificate of title
*land tax certificate
*emergency services levy certificate
*SA Water certificate
*the property interest report can be ordered using SAILIS or from Land Services,
A property interest report refresh is also available that provides an instant update to confirm any changes to the original property interest report within 90 days of the initial request.
PROPRIETOR – The owner of an estate or interest in land. See also registered proprietor.
PUBLIC AUCTION – See Auction.
PURCHASER – The person buying the property. Also called a 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 PROPERTY – All the rights, interests, and benefits related to the ownership of real estate. Real property is a legal concept distinct from real estate, which is a physical asset. There may also be potential limitations upon ownership rights to real property.
REFERRAL – The act of telling someone about the positive features of a person or a business, or the person who is being referred. This could be for a consultation, a review or further action which would be of benefit to the referred person.
An example of a referral is telling someone or giving a recommendation, why a certain reliable, ethical and trusted person or business would be of help to them or a good relationship for them to consider. You can Refer a Friend here.
REGISTERED PROPRIETOR – Any person appearing by the register book or by any registered instrument of title to be the proprietor of land or of a mortgage, encumbrance or lease.
REGISTER GENERAL – The official charged by the Real Property Act with the responsibility for the administration of that act. The Registrar-General (who is responsible to the Attorney-General and ultimately to parliament) acts through officers of the Land Titles Office who have been delegated his or her powers, duties and functions.
RESERVE PRICE – A seller’s minimum sale price for the property. It must be recorded in the auction record and cannot be more than 110% of the vendor’s acceptable price.
RESIDENCE – The place where one lives; a person’s home.
RESIDENTIAL PROPERTY – Property zoned and used for dwellings such as houses, flats and apartments.
SALES AGENCY AGREEMENT – A legally binding document which is signed by the seller and the agent. It details the agreement between the seller and the agent. Many aspects of the sales agency agreement such as commission and advertising costs are negotiable between both parties. Remember you get what you pay for.
SALES REPRESENTATIVE – A registered person employed by a registered land agent to sell real estate.
SECTION 7 – A section of the Land and Business (Sale and Conveyancing) Act 1994 that identifies the requirement for a statement of government interests to be served by a vendor or their agent, on a purchaser prior to settlement. The property interest report provides information to comply with this requirement.
SELLER’S MARKET – The condition which exists when, under competitive conditions, the pressures of supply and demand are such that market prices are at a relatively high level, giving the seller an advantage. An under-supply causing prices to increase.
SETTLEMENT – (Purchased Property) 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.
SETTLEMENT DATE – The date on which a contract of sale is finalised and the balance of money is paid for an asset.
SPECIAL CONDITION – A condition that must be met before the contract is legally binding. For example, if buying a home, the purchaser may specify that the contract is not legally binding until the purchaser has obtained finance or a building inspection.
SPECULATOR – One who speculates; that is, one who buys any commodity, including real estate, in the expectancy of selling in a higher market.
STAMP DUTY – The tax imposed by state governments on certain contracts (e.g. Contracts of Sale and Registered Leases). The amount of tax payable is calculated as a percentage of the contract value.
STRATA CORPORATION – A corporation created by the deposit of a strata plan and consisting of the registered proprietors of the units defined in the plan.
STRATA PLAN – The registered plan of a strata title property showing the boundaries of lots and unit entitlements. Pursuant to legislation on strata or unit titles.
STRATA TITLE – Individual ownership of an apartment or unit within a block or multi-unit complex. This is separate from and additional to the joint ownership of common areas shared by all the property owners in the building or complex.
STCC – Subject to Council Consent. For example, a block is sold as sub-dividable STCC. Meaning the local council needs to give their approval after checking it meets planning and zoning guidelines and regulations.
SUBDIVISION – Divisions by a land owner, of all or part of a parcel of land, into separate allotments (or sections), each with a separate title, in accordance with a ‘plan of subdivision’ approved by the planning authority.
TIME IS OF THE ESSENCE – Contract law term indicating the time period within which a contract or certain Acts specified in a contract have to be executed. It means hurry up.
TITLE – A legal document that identifies who has a right to the ownership of a property. Usually called a Certificate of Title. The form of ownership of real estate (i.e. Torrens, strata or company title).
TITLE DEEDS – Documents evidencing the ownership of property.
TITLE REFERENCE –
- Certificate of title (CT) – a certificate issued pursuant to the RPA, which certifies that the person named therein as the registered proprietor has title to the land described in the certificate. It can exist in a manual (Imperial or Metric) or computerised format. The original title is retained by the Lands Titles Office.
- Community title (CT) – a certificate of title for a community lot, community strata lot, development lot or common property in a community plan.
- Crown lease (CL) – a lease of Crown land authorised by statute (e.g. the Crown Lands Act 1929). Crown leases are dealt with in a similar way to certificates of title.
- Crown record (CR) -a computerised record of un-alienated crown land. It must not be confused with a certificate of title (to which it bears some superficial visual resemblance).
- Limited title (LT) – a certificate of title issued as part of the conversion process from the old system, where either survey data or proof of ownership is insufficient to issue a regular certificate of title.
TITLE SEARCH – A check of public records to make sure that the vendor has the right to sell and transfer ownership of a property.
TORRENS TITLE – The title to land by registration. Originating in South Australia under the stewardship of R.R. Torrens (later Sir Robert Torrens) and enacted in 1858. The Torrens titles has superseded the ‘Common Law Title’ system throughout Australia. Under the Torrens system dealings and ownership of land are managed by registration with the Titles Office. It is governed by the real property act.
TORRENS TITLE SYSTEM – The system employed in all Australian jurisdictions under which title to land is conferred by the official registration of a dealing in that land. The fundamental principles of the system are:
- that it is the act of the Registrar-General in registering a dealing which passes the legal title to land or creates legal interests therein
- that registration confers indefeasibility of title
- that it is not necessary for a person intending to deal with the land to investigate the history of a registered proprietor’s title and
- that the title is guaranteed by the government, such that should a person be deprived of an interest in land, he or she will be paid monetary compensation.
The system is named after its creator, Robert Torrens, who introduced it in South Australia in 1858.
TRANSFER – Document registered in the Land Titles Office recording change of ownership of a property.
TRANSFEROR – The person transferring any land, mortgage or lease.
TRANSFEREE – The person to whom any land, lease or mortgage is transferred.
TRUST ACCOUNT – A legislatively required bank account where monies are held by an agent for or on behalf of another person e.g. deposits, rental etc.
UNCONDITIONAL SALE – The point when seller and buyer are legally bound to complete the sale.
VACANT POSSESSION – Refers to a property purchase that is not subject to a lease, is vacant and can be occupied or rented out immediately upon settlement.
VALUATION – An estimate of the value of a property by a qualified and licenced Valuer, usually for a fee. Only a qualified Valuer can undertake valuations. Whereas a land agent can perform an appraisal of the property.
VENDOR – One who sells anything. In real estate transactions, the person(s) or entity selling the property.
VENDOR BID – A bid made on behalf of the vendor. Vendor bids can only be made by the auctioneer and only when the auction rules allow it. The auctioneer makes this statement before bidding starts and announces each vendor bid as, or before, it is made.
VENDORS STATEMENT – FORM 1 – Information which the seller must provide to the buyer advising of restrictions such as easements and outgoings such as rates, and any other notices such as a compulsory acquisition.
ZONING – A local planning tool to control the present and future development of land and its permissible use.
Naturally, this list is far from comprehensive, but we hope it answers some of your questions. Should we ever use a term that you don’t fully understand, please speak up? We’re happy to clarify it for you.
For an Even More Comprehensive List of Other Real Estate Terms as well as those for Building & Finance – Click Here.
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Like most things in life, these are recommendations only. It is not legal advice, it may or may not suit your own circumstances and you may need to make your own additional enquiries.
Regards Eriks & Team Plaza Real Estate