The plethora of big words used in real estate can bit a little tricky to get your head around – so here is a basic list, or glossary if you will, of some of the most commonly used terms to help you have a better understanding before you begin your house hunting.
Acceptance Consent by the person receiving the offer to be bound by the terms and conditions of the person making the offer. Acceptance of an offer constitutes an agreement.
Administrator A person appointed by a probate court to administer the estate of a person who died intestate (without a will).
Advertised price Selling at an advertised price means that a property is marketed with an asking price – the amount the seller expects to be paid for it. This amount is decided by the seller in discussion with the agent.
Agency agreement A legally binding contract between the seller and the agent. It sets out the terms and conditions on which an agent is appointed, what the agent will do and what they will be paid. If you want an agent to sell a property then you need one of these.
Agreement The written contract for the sale and purchase of property between the seller (vendor) and the buyer (purchaser).
Amenity A feature of real property that enhances its attractiveness and increases the occupant’s or user’s satisfaction although the feature is not essential to the property’s use, eg: scenic views, proximity to public transport or recreational facilities.
Appraisal A written analysis of the estimated value of a property prepared by a qualified appraiser.
Appreciation An increase in the value of a property due to changes in market conditions or supply and demand, etc.
Architrave A decorative moulding around doors or windows.
Asking Price The listed price of the property but may not always be the selling price. The owner may be willing to negotiate.
Assessed Value The valuation placed on a property for the purposes of taxation by an authority.
Assignment The transfer of a mortgage or lease from one person to another.
Auction A public sale of a property or real estate that is sold to the highest bidder when the owner’s reserve is reached
Backup Offer A second offer which is accepted by the vendor, although the vendor has already accepted another offer that had conditions attached to it. Timeframes need to be carefully adhered to. If the first offer does not confirm by the time stated in the agreed contract then the second(back up) offer kicks into place and the first contract is at an end.
Beneficiary The person designated to receive the income from a trust, estate, or a deed of trust.
Body Corporate An administrative body made up of all the owners within a group of units or apartments of a strata building. The owners elect a committee, which handles administration and upkeep of the site.
Body Corporate Levy A fee that is paid yearly by apartment owners and some townhouse owners to cover costs of common areas, building insurance, cleaning and lighting by way of example.
Boundary The lines that define the perimeter of a property.
Bridging Loan/Finance A short term loan (usually at a higher rate) taken out to cover the financial gap between buying a new property and selling an existing property.
Building Code Local Council regulations that control design, construction and materials used in construction.
Builders report A buyer should find out as much as they can about the condition of the property. This can be done by a property inspection carried out by a New Zealand Standards compliant property inspector.
Business Day A standard day for conducting business. 9.00am – 5.00pm. Excludes weekends and public holidays.
Buyers Market When the demand for property is less than supply so the advantages shift to the buyer.
Buyer Enquiry Over (BEO) An indicative minimum price that the seller will sell the property for.
Capital Gain The gain on the sale of a capital asset.
Capital Improvement Any structure or addition to a property erected as a permanent improvement that adds to its value and useful life.
Caveat A warning on a title to a purchaser that a third party might have some interest or right in the property.
Caveat Emptor A Latin phrase for “Let the buyer beware”, i.e: the onus is on the buyer to be satisfied with any item before purchasing.
Certificated Salesperson All Salespeople in real estate who have not qualified by exam to be an Associate (AREINZ), who are employed by a licensed Real Estate Agent.
Certificate of Occupancy A document issued by a local government to a developer permitting the structure to be occupied. This generally indicates that the building is in compliance with public health and building codes.
Certificate of Title A description of a property with the name of the registered owner and encumbrances, i.e mortgages or easements on the property. It must be produced by the vendor before the sale of the property.
Chattels Moveable and removable items of personal property. In real estate transactions, chattels included in the sale usually include the stove, television aerial, carpets, blinds, curtains, drapes and light fittings. However, unless chattels are specified in the agreement, they are not sold as part of the property.
Clear Title A title that is free of legal questions as to ownership of the property.
Commission A proportion (usually a percentage) of the sale price of a property paid to a real estate agent for negotiating a real estate transaction.
Common Property Area of building, land or amenities within a strata title property that are shared by all owners, eg: a driveway.
Conditional Agreement This is a legally binding contract, but it is subject to conditions being satisfied, usually by the purchaser. The conditions will be detailed in the agreement and may, for example, require that you are able to sell your existing home by a set date or to arrange finance by a certain date. Conditions can also be included by the purchaser that require the seller to do something by a specified date – for example, that settlement will take place only on the conditions that the house is painted, the windows repaired or that rubbish around the section is removed. Note: Purchasers’ conditions usually do not prevent the sale-taking place, but may allow the purchaser to delay settlement without penalty or claim damages if the conditions are not met in time.
Construction Loan Also called Building Loan. A short-term, interim loan (only paid to registered builders) for financing the cost of construction. The lender makes payments to the builder at periodic intervals as work progresses.
Contract Note An agreement in writing setting out the terms and conditions relating to the sale or purchase of a property.
Contract of Sale An agreement in writing setting out the terms and conditions relating to the sale or purchase of a property. It is the purchase document signed at auction.
Covenant Terms, conditions and restrictions noted on the title. A covenant may affect future plans or resale of the property.
Cover Note A document issued by an insurance company giving temporary insurance until a formal policy is issued.
Cross Lease This type of ownership is common where there is more than one home on a block of land. You are all owners of the land and you each lease your home. The lease will usually provide for an exclusive use area for each cross-lessee. It’s like owning a freehold property but there are some restrictions. Another form of ownership for more than one home on a block of land is a unit title.
Deed A legal document conveying title to a property.
Deadline sale Deadline sale is a sales method where a property is marketed for a set period with an advertised end date. The vendor is not obliged to accept any offers and can choose to accept an offer at any point during the listing period. Some deadline sales, however, will not accept any offers prior to the advertised end date, but this must be stated very clearly in all advertising and marketing material.
Deposit A percentage of the purchase price given to bind the sale of real estate.
Depreciation A decline in the value of property due to changes in market conditions or other clauses.
Easement A right that someone has to use the land belonging to another, eg: a water authority may have a sewerage easement across part of your property.
Encumbrance An impediment to the use or transfer of the property in the form of an interest or right in the property.
Equity The amount of an asset actually owned, equity is the difference between the market value of the property and the amount still owed on its mortgage.
Exclusive Listing/Sole Listing A written contract that gives a licensed real estate agent the exclusive right to sell a property for a specified time.
Fee Simple The greatest possible interest a person can have in real estate.
Fittings Objects that can be removed from a property without causing damage to it.
Fixtures Fixed items that cannot be removed without damaging either the property or the fixture itself, eg: cupboards.
Footing The footing supports the building on its foundation.
Foreclosure The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually results in the selling the property by auction and the proceeds being used to service the mortgage debt.
Freehold An estate in real property which continues for an indefinite period of time. Freehold estates may be inheritable or non-inheritable. Inheritable estates include the fee simple absolute, the qualified fee, and the fee tail. Non-inheritable estates include various life estates which are created by acts of parties, such as an ordinary life estate, or by operation of law.
Gable The triangular part of a building’s end wall which extends up to meet the two slopes of a roof.
Guarantor A person who agrees to indemnify the holder of a loan of all, or a portion of, the unpaid principal balance in case of default by the borrower.
GV – Government Valuation The official estimation of a property’s worth on the market at the time it was valued, under the Rating Valuations Act 1998. Now called a “Rateable Value”.
Habitable Suitable for occupancy. Local building codes ensure that structures are habitable through requirements for building permits and certificates of occupancy.
Home Inspection. A thorough inspection that evaluates the structural and mechanical condition of a property.
Investment Property A property that is not occupied by the owner, but provides a return to the owner through letting or leasing to a tenant.
Laminated Timber Layers of timer glued and pressed together to increase rigidity or to use as bench tops or cupboard doors.
Leasehold You buy the right to own the home and lease the land for a certain time. You pay rent to the landlord for the land. You can sell the lease if you want to move on. There may be restrictions on your use of the property.
Liabilities A list of debts owned.
Lien A legal claim against a property that must be paid off when the property is sold.
LIM Report (Land Information Memorandum) A LIM is a report prepared by the local Council at your request. It provides a summary of property information held by the Council as at the day the LIM was produced.
Listing A written contract between an owner and a real estate agent, authorizing the agent to perform services for the principal involving the owner’s property. Once signed by both the vendor and the agent, the property is listed for sale.
Manhole An opening which permits access to the space between the roof and the ceiling, or below the floor.
Market Value The price at which a seller is happy to sell and a buyer is willing to buy. This assumes that there is sufficient activity in the marketplace to generate enough buyers and sellers so that neither party controls the price. Establishing the market value is the objective of an appraisal.
Negative Gearing Where the return on an investment is not sufficient to cover the costs on the investment, eg: property maintenance and interest on the loan against income from letting/leasing.
Negotiation Make an offer and we will attempt to negotiate a concluded contract between the parties.
Nominee A person who, in a limited sense, acts for or represents another.
Null and Void That which cannot be legally enforced, as with a contract provision that is not in conformance with the law.
Off The Plan To purchase a property before it is completed after having only seen the plans.
Offer Conveyed intent by one party to form a contract, which may have conditions and stipulations, with another party.
Offers A process of calling for offers on the property, usually required by a certain date.
On the market At an auction, a property is “on the market” if the highest bid will now be successful and any reserve no longer applies.
Passed In The highest bid fails to meet the reserve price of a property at an auction and consequently does not sell.
PIM (Project Information Memorandum) A report giving information on items such as potential erosion, subsidence, hazardous contaminants, stormwater. It may also include classifications under organisations such as the Dept. of Conservation or Historic Places Trust, as well as authorisations required by the Resource Management Act.
POA A pricing method used by some Real Estate companies, meaning Price On Application.
Possession When you have paid for the property and have the right to move into it.
Private Sale The sale of property by the owner without the services of a real estate agent.
Private Treaty Sale The sale of property, through a real estate agent, by negotiation.
Proxy A person who represents another, particularly, in some meeting. Also, the document giving to another, the authority to represent.
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.
Rafter Part of the framework of the roof, the rafters slope down from the ridge to the eaves.
Real Estate Agent A person or Company licensed to negotiate and transact the sale or lease of real estate on behalf of the property owner.
REINZ Real Estate Institute of New Zealand. National representation body of real estate agents.
Requisitions on Title A process where the buyer requests additional information about the title of the property from the vendor.
Reserve Price The minimum price which a seller will accept at auction.
Resource Consents Resource consents are necessary when a group or individual wishes to carry out an activity or development that may have some effect on the environment. Resource consents relate directly to the rules set out in the District or Regional Plans and the Resource Management Act and are different to Building Consents.
Right of First Refusal A provision in an agreement that gives a party the first opportunity to purchase or lease the property before it is offered for sale or lease to others.
Right of Way A right of one property or the general public for access to or across another property.
Roof Pitch The slope of the roof.
Sash The frame in which a pane of glass is set to form a window.
Seller’s Market When demand for property is greater than supply. The result is greater opportunities for owners who may find someone willing to offer the asking price or even a figure greater than the asking price.
Semi-detached A type of construction where two buildings are attached together by a common wall.
Settlement The sale of a property is finalized by the legal representatives of the vendor and the purchaser. Mortgage documents come into effect, costs are paid and the new owner takes possession of the property and receives the keys.
Sinking Sinking of the soil or any part of the structure which it supports.
Shingles Thin pieces of wood or other material set in overlapping rows to form a roof or wall cladding.
Sill The horizontal section of material at the base of a window opening.
Skillion A roof shape consisting of a single sloping surface without a ridge.
Sole/Exclusive Agency A sole or exclusive agency precludes all other agents from working on the disposal of the property, although another agent may approach the sole agent if the former has a suitable client. But even then the sole agent would finalise the deal.
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 a building inspection and been satisfied by the report.
Strata Title A title to a unit or lot on a plan of subdivision associated with townhouses, units and blocks of flats and based on the horizontal and vertical subdivision of air space. Owners have a certificate of title, are absolute owners of a freehold flat and have an undivided share of the common property.
Studs The uprights in the wall of a building.
Subdivision A tract of land divided into individual lots for a housing development.
Survey A drawing or map showing the precise legal boundaries of a property, the location of improvements, easements, rights of way, encroachments, and other physical features.
Tender A process of selling, calling for purchasers to make their best offers in writing for that property by a given date.
Title A legal document evidencing a person’s right to or ownership of a property.
Title Search A check of the title records to ensure that the seller is the legal owner of the property and that there are no other claims outstanding.
Townhouse A dwelling unit, generally having two or more floors and attached to other similar units via party walls. Can be Strata or Crosslease titled.
Transfer A document registered at the Land Titles Office and noted on the Certificate of Title which verifies the change of ownership of a property.
Trustee A person who holds or controls property for the benefit of another.
Trust account Any real estate agency that a buyer pays a deposit to, is required by the Act and the Regulations to hold the funds in a trust account until the agreement become unconditional.
Unconditional Agreement The legal contract that binds both the purchaser and the seller to settle on the agreed date at the agreed price. It is either not subject to any conditions or those conditions have already been satisfied. You should only consider entering an unconditional agreement if, and when, you are absolutely sure you want to buy a particular property and you already have the full purchase price or ‘pre-approved’ loan finance from a lender. You should also be confident that there are no other issues or requirements that must be satisfied before you are committed to purchase the property. An unconditional agreement commits you to purchasing the property.
Under License Early possession of the property before settlement with the permission of the vendor. This usually involves the payment of rent.
Unsecured Loan A loan that is not backed up by assets or guarantee.
Utilities The private or public service facilities such as gas, electricity, telephone, water and sewer that are provided as part of the development of the land.
Valuation A written analysis of the estimated value of a property prepared by a qualified valuer.
Vendor The person or entity legally authorised to sell a property.
Void Having no legal force or effect. Unenforceable.
Wall cavity The space between the inner and outer sections of a wall.
Water Course A natural stream of running water being fed by a natural source such as a stream or river.
Working Day Means any day of the week other than:
- a) Saturday, Sunday, Good Friday, Easter Monday Anzac Day, Queen’s Birthday Weekend, Labour Day, New Zealand’s anniversary day and the provincial anniversary day as observed at the place where the property is situated; and
- b) a day in the period commencing on the 24th day of December in any year and ending on the 5th day of January in the following year, both days inclusive.
A working day shall be deemed to commence at 9am and to terminate at 5pm.
Yield The interest earned or return by an investor on an investment, stated as a percentage of the amount invested.
Zoning Local authority guidelines for the permitted use of land.
About the Author: The above article on Real Estate Jargon was written and provided by Brent Palmer, a local leader in the field of Richmond and Nelson Real Estate sales, marketing, advanced technology for home selling, and social media.
You can contact Brent Palmer here, or at 027 544 9921. He has helped many people buy and sell homes in the Nelson, Stoke and Richmond areas for years, and would love the opportunity to help you as well.
Thinking of selling your home? I have a real passion for helping people sell their homes in our Nelson and Tasman Region, as well as the marketing, social media & advanced technology for home selling that goes along with it. I’d love to have the opportunity to sit down with you discuss how we can work together to get you the best price.
I help people buy and sell real estate in the following Nelson and Tasman towns & neighbourhoods: Wakefield, Brightwater, Hope, Appleby, Redwood Valley, Mapua, Stoke, Tahunanui, Atawhai and of course, Richmond and Nelson City.
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