Frequently Asked Questions – Real Estate terms

  • Agent
    The person or firm appointed in writing by you to act on your behalf with third parties, and thereby receive a commission.
  • Agents in conjunction
    You (as a vendor or landlord) may appoint more than one agent; or an appointed agent may act with another agent who introduces a purchaser or tenant, to your property.
  • Allotment
    A small site for home building, sometimes called a block.
  • Appreciation
    An increase in property value triggered by inflation, improvements or increased demand.
  • Arrears
    Usually considered a debt in rent, which have not been paid on time.
  • Assets
    The sum of a person’s real and personal property, including equities.
  • Assignment
    The transfer of a property, a lease, rights or an interest and sometimes a liability from one party to another.
  • Auction
    Sale of a property in public to the highest bidder at a set time and date.
  • Bond
    In rentals, a sum of money which is paid by the tenant to ensure against damages to the property
  • Building
    ApprovalThis is the first stage of building a home on land where the approval has been made by the council that the land can be built on.
  • Bridging Finance
    A temporary loan to bridge the time-gap between paying for one property and receiving payment from a previous property.
  • Building Line
    The uniform distance, usually from a road, behind which buildings must be erected.
  • Building Regulations
    Laws laying down standards in materials and construction methods which you must observe to maintain health, safety and certain design minimums in any building or alteration.
  • Buying Commission
    The money you pay to an agent for helping you to acquire a specific type of building.
  • Breach of Contract
    Breaking the terms of the contract.
  • Capital Gain
    The profitable difference between your buying price and selling price, now subject to Capital Gains Tax.
  • Client
    A person who engages an agent or valuer, and who is obliged to pay that agent or valuer commission or fees.
  • Commercial Property
    For business purposes office buildings, shops, warehouses, hotels etc.
  • Commission
    A percentage payable to real estate agent for selling a property by the person authorising the sale. Usually a percentage of the sale price.
  • Conditional Sale
    Subject to conditions such as finance, building inspections etc.
  • Construction Costs
    The sum of labour and material costs, plus contractors overheads and profits in the erection of improvement of a property.
  • Contemporary Home
    New/21st century/modern. Very geometric, diverse and open planned.
  • Contract of Sale
    Written agreement setting out the terms and conditions of a property sale.
  • Counterpart
    An identical copy of an original document.
  • Covenant
    An agreement between landlord and tenant, or vendor and purchaser, covering specific things which will be done or cannot be done to a property.
  • Cover Note
    Immediate insurance cover, often issued by an insurance broker on the insurance company’s behalf, for a property which has just been bought.
  • Conveyancing
    Legal process of transferring the ownership of a property from one person to another.
  • Date of Settlement
    The day, under the terms and conditions of the contract, when a vendor is obliged to transfer a property to the purchaser.
  • Deposit
    Usually 5% – 10% of the purchase price of a property placed in trust as evidence of intention to buy. Non-refundable, after exchange of contract, it goes towards the purchase price when the sale goes through.
  • Depreciation
    Drop in a property’s value due to passage of time, deterioration, or changes to neighbouring properties.
  • Developer
    A person who buys property and by improving it through sub-division or construction for instance lifts it’s value.
  • Easement
    The contractual right of one person to use a portion of another persons land, usually as a drive for access or as a run off for water.
  • Economic Life
    The potential number of years a property could be profitable.
  • Effective Rate
    The real rate of return or repayment, as opposed to the nominal rate.
  • Encroachment
    When a building overhangs someone else’s property, or a fence is built over the dividing line between two properties.
  • Encumbrance
    An easement, mortgage, or other liability on a property which impedes its use or transfer.
  • Environmental Impact Study
    An experts assessment of long-term environmental effects of a particular land-use scheme.
  • Equity
    The percentage of a property an owner holds after outstanding loans have been deducted from the market value.
  • Facade
    The front face of a building.
  • Fixtures
    Items that can not be removed without being damaged. Refers to items in or around a property.
  • Freehold
    A property which is owned outright and for unlimited duration.
  • General Law Title
    Such a title pre-dates the Torrens Title System under which ownership is government-recorded by Certificates of Title; it is based on a comprehensive history of ownership.
  • Head Room
    The distance from floor to ceiling. .
  • Hectare
    The metric measurement of land area equal to 10,000 square metres, or 2.47 acres.
  • Height Density
    Another zoning regulation limiting the height of buildings in a particular area.
  • Holding Deposit
    One weeks rent on the property applied for which secures the perspective tenants interest.
  • Home Units
    Individually-owned homes in a development of two or more homes.
  • Investment Return
    The rate per month (or year) of return on investment produced by rental and resale.
  • Irrevocable
    Cannot be undone.
  • Joint Venture
    Two or more people or companies combine to carry out a project or enterprise.
  • Landlord
    The owner of a property for leasing.
  • Land Usage
    Determined by zoning regulations residential, industrial etc.
  • Lease
    The formal arrangements by which one party has use of another’s property in return for rent.
  • Lease with option to purchase
    A lease embodying the right of the lessee to buy the property at an agreed price within an agreed time.
  • Lessor
    The party who grants a lease.
  • Listing
    A property available for sale or rent.
  • Maintenance
    The expenditure required to keep a property in an efficient operating condition.
  • Managing Agent
    A real estate agent authorised by you to manage your property.
  • Market Price
    The price paid for a property it is real, whereas “market value” is only an estimate.
  • Mezzanine
    An intermediary floor, usually between the ground and first floors.
  • Mortgage
    A document pledging a property as security for the repayment of the money you borrow on the property.
  • Mortgagee
    The lender on the mortgage.
  • Mortgagor
    The borrower.
  • Multiple Listing
    System of selling the property through many agents. The buyer pays only one commission. This goes to the agent who lists the property on an official multiple listing form and is shared between the first agent and the agent who actually finds the buyer.àNet LeaseWhere your lessee is responsible for all building outgoings on top of the agreed rent.
  • Offer to Purchase
    A formal legal agreement which offers a specified price for a specified property. The offer may be firm (no conditions attached) or conditional (certain conditions apply).
  • Option
    In selling, the right (secured by a payment) to purchase a property at an agreed price on or before an agreed date. In leases, the right to renew at a mutually agreed rent.
  • Outgoings
    All expenses on a property.
  • Passed In
    When a property fails at auction to reach the vendors reserve price. (The highest bidder has the right to meet the reserve price or try to negotiate an acceptable price).
  • Prestige
    A perception. Up market. High quality of living. Refers to area’s and housing.
  • Plot Ratio
    The ratio of building area to site area.
  • Presentation
    Refers to an agent presenting themselves and the company they represent in a good light to a perspective buyer.
  • Private Sale
    The sale of a property without the assistance of a Real Estate Agency.
  • Property Management
    A real estate agent manages properties for landlords ensuring the property complies with legislation and regulations at all times, selecting tenants, collecting rents, arranging maintenance and so on.
  • Public Liability
    The insurance taken by companies and private individuals to protect themselves against claims made by members of the public, who might be injured in some way on the property.
  • Rateable Value
    The estimated value of a property on which rates are assessed.
  • Real Property
    The ownership of physical real estate land and buildings.
  • Redevelopment
    The updating of urban property, usually by demolition and rebuilding.
  • Reserve Price
    Price below which an owner is not prepared to at auction.
  • Restrictive Covenant
    Land is sold with,perhaps, the covenant that only one home can be built upon it or that the home must be built at a specified cost or height.
  • Rezoning
    A planning term in which the local authority can alter a planning scheme to allow, say commercial rather than residential building.
  • Sale and Lease Back
    An investor buys a property and leases it back to the seller – a practice which is on the increase.
  • Settlement
    Completion of sale when balance of contract price is paid to the vendor and the buyer is legally entitled to take possession of the property.
  • Site Value
    The amount an unencumbered piece of land, less any improvements, is likely to realise at the time of a muncipal valuation; the land component of a developed property.
  • Sole Agency
    One agent or agency has the sole rights to sell a property.
  • Speculator
    A punter who buys property in the ecpectation of selling it later for a higher price.
  • Stamp Duty
    A State Government Tax imposed on the sale of real estate. It is determined by the sale value, and it varies between states.
  • Strata Title
    The title for a segment of a property, flat, unit, office in which there are several owners. (Nowadays, a separate Torrens Title is issued).
  • Sub-division
    The division of apiece of property into building lots; inevitably required several official approvals.
  • Sub-lease
    A property which is already leased is leased again, but not for a longer period that the unexpired part of the original lease.
  • Survey
    The accurate measurement and description of a piece of land, usually showing structures and contours.
  • Tenant
    Occupant of a property whether it be a house, unit or apartment.
  • Title Deeds
    The documents proving ownership of property.
  • Valuation
    An estimated value of a property based on features and renovations etc.
  • Vendor
    Person offering a dwelling for sale.
  • Vendor Terms Contract
    When a property is paid for over time usually a deposit and then regular payments of the balance, plus interest over several years.
  • Vendor Statement
    Statement setting out particulars of the property, made by the vendor.
  • Without Prejudice
    These words, used during negotiation, mean that any suggestion or plan put forward cannot be used as evidence later if the negotiations fall down.
  • Yield
    The money you derive by way of income or profit from a property deal.
  • Zoning
    The method by which councils or planning authorities control property use: residential, industrial etc.

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