Understanding Real Estate Terminology: A Comprehensive Guide
In the realm of real estate, there exists a labyrinth of jargon and terminology that often leaves buyers and sellers bewildered. Whether you're a seasoned investor or a first-time homebuyer, navigating these terms is essential. Let's shed some light on the key words you'll encounter during your real estate journey:
1. Agent: A licensed professional authorized under the Real Estate Act to represent clients in property transactions, including sales, purchases, rentals, and management.
2. Amenity: Describes features or characteristics of the local neighborhood that enhance the appeal of a property.
3. Allotment: A term referring to a specific parcel of land; other common terms include "lot" and "block of land."
4. Apartment: Often synonymous with "unit" or "home unit" in real estate.
5. Appreciation: The gradual increase in a property's value over time, influenced by economic factors, supply and demand, inflation, and socioeconomic conditions.
6. Appraisal: An estimation of a property's value.
7. Auction: A sales process where the property is sold to the highest bidder under predefined conditions.
8. Boundary: The delineated lines that separate adjacent properties.
9. Breach of Contract: Violation of the terms and conditions stipulated in a contract.
10. Brick Veneer: A construction method where a wooden frame is encased by an external brick wall.
11. Bridging Finance: A short-term loan obtained before securing long-term financing; typically more expensive than traditional loans.
12. Building Regulations: Minimum standards and guidelines for constructing dwellings, ensuring safety for owners, builders, and the public.
13. Caveat: A third-party's claim on a property's title due to money owed by the current owner.
14. Certificate of Title: A legal document confirming land ownership.
15. Chattels: Movable property within a dwelling that can be removed before settlement, e.g., furniture, personal items.
16. Clear Title: A title without existing restrictions, such as mortgages that need to be satisfied before settlement.
17. CMA (Comparative Market Analysis): An analysis of local home sales to determine a reasonable property price.
18. Commission: A fee payable upon completion of a service, e.g., agent's fee for property sales.
19. Common Property: Land shared among multiple properties, such as a shared driveway in a group of units.
20. Community Title: When multiple dwellings share common areas; each dwelling has its own Community Title and must adhere to defined rules.
21. Contract of Sale: A legal document outlining sale conditions between vendor and purchaser.
22. Conveyance (act of) and Conveyancer (legal representative): The legal representative facilitating property title transfer between parties.
23. Cooling Off: A predetermined period during which the purchaser can change their mind (See "What is a Cooling Off Period" article).
24. Covenant: An agreement specifying property features, landscaping, and other regulations, often found in housing developments.
25. Deposit: A pre-determined amount, often 10% of the purchase price, paid upon signing a contract (at auction) or after the cooling-off period (private treaty).
26. Duty: Government tax or charges related to a transaction.
27. Escrow: An account where closing costs are collected while awaiting lender approval (referred to as a "Trust Account" in Australia).
28. Fittings: Movable property that can be removed without causing damage.
29. Fixtures: Items permanently attached to the property, like built-in robes or a pool.
30. Free Standing: A standalone dwelling not attached to others.
31. Home Unit: A dwelling within a group of properties sharing common areas under Community Title or Strata Title.
32. Interest Only: A mortgage with repayments covering only interest, leaving the principal unchanged. (For more information check out: "What are the different Mortgage or Home Loan structures? What products are available? And how to make it work for you!")
33. Joint Tenants: Co-ownership by multiple parties with equal shares, granting a "Right of Survivorship."
34. LVR (Loan to Value Ratio): A calculation used by lenders to assess loan risk.
35. Mortgage: A contract outlining loan terms for property purchase.
36. Mortgage "Fixed": A loan with repayments covering both principle and interest where the interest rate will remain stable for the term agreed upon. (For more information check out: "What are the different Mortgage or Home Loan structures? What products are available? And how to make it work for you!")
37. Mortgage "Variable": A loan with repayments covering both principal and interest, with rates subject to market fluctuations. (For more information check out: "What are the different Mortgage or Home Loan structures? What products are available? And how to make it work for you!")
38. Mortgagee: The entity providing the loan.
39. Mortgagor: The borrower.
40. Owners Corporation: A committee managing common areas for properties within a group, e.g., units or townhouses.
41. Principal: The total amount owed to the lender.
42. Private Sale: Selling property without an agent, with direct dealings between the vendor and purchaser.
43. Private Treaty: Selling property through an agent, with the agent facilitating negotiations.
44. Reserve Price: The minimum price set before an auction, at which the vendor will sell.
45. Right of Way: The legal right to access a portion of land.
46. Semi-Detached: Two dwellings sharing a common wall, possibly under Community Title or Torrens Title.
47. Strata Title: Multiple units or dwellings sharing common areas, with shared maintenance costs and rules.
48. Tenants In Common: Co-ownership without a "Right of Survivorship." I.e. Owning a property by two or more parties held via equal shares. If one person dies then their share of the property will pass onto the deceased parties “Will”. Therefore there is not “Right of Survivorship” in a tenancy in common.
49. Terrace: Row of dwellings attached by common walls, possibly under Torrens Title or Community Title.
50. Torrens Title: Guarantees complete ownership of the land.
51. Townhouse: Two-story dwellings attached by common walls, typically under Community Title.
52. Transfer: A document submitted to the Land Titles Office to change property ownership.
53. Unencumbered: Property free from covenants, mortgages, or other restrictions.
54. Unit: A group of dwellings that can be either free standing or attached via common walls and will be registered with as Strata Title (or on a very few occasions Community Title). They will all share common property such as gardens and driveways but not limited to.
55. Vendor: The current property owner.
56. Villa: Single-story dwellings attached by common walls, under either Strata or Torrens Title.
Navigating the world of real estate can be daunting, but with this comprehensive guide, you'll be better equipped to understand the terminology. For further information and tips on all things real estate, visit our “Tips & Blog” page, and don't forget to download the free "The Property Buyers Guide App."