Real Estate Jargon
AGENT - A person authorised to act for another (usually for the owner) in the selling, buying, renting or management of a property. Commonly used to refer to licensed real estate agents and real estate representatives.
AGENTS IN CONJUNCTION - Two or more agents employed by a principal to sell or let real estate and share commission.
APPRAISAL - The term commonly used in America to indicate what is termed in Australia as a Valuation. In Australia, the term means an opinion of the potential saleability of a residential property by a licensed Real Estate Agent.
APPRECIATION - An increase in value.
ARREARS - Unpaid debts.
AUCTION - A sale usually in public, by an auctioneer, in which property is sold to the highest bidder.
BASIS POINT - One percent (1%) is the equivalent of 100 basis points.
BODY CORPORATE - (a) A term used in the Strata Titles Act to describe the body representing the building owners; (b) The control and administration of common property is vested in a statutory Body Corporate which comes into existence automatically on the registration of the plan, and to which the provisions of the Companies Act do not apply. The registered proprietors of the units are the only members of the Body Corporate. Associated rights and obligations are fixed by scheduled by-laws.
BOND (RENTAL) - Consideration held usually under a lease to ensure performance of lease terms and conditions. Normally refundable if possession of property is returned in good condition.
BUSINESS BROKER - An estate agent licensed and certified to sell businesses.
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.
BUYER’S AGENT - Represents a property buyer in negotiations with a vendor or his/her agent. The buyer’s agent is paid by the buyer. Buyer’s agents should be licensed and certified to act as a buyer’s agent.
CAPITAL GAIN - The amount by which the net proceeds from resale of a capital item exceed the book value of the asset.2 Refer to The Australian Tax Office (ATO).
CAPITAL GAINS TAX - A Commonwealth tax payable on the Capital Gain made on the sale of an investment property. Refer to current requirements of the Australian Taxation Office (ATO).
CAVEAT - A notice on title proclaiming a possible interest other than that of an owner.
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.
CHATTELS - Any fixed asset other than freehold land. 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.
COMMISSION - The fee or payment made 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.
COMMON PROPERTY - (a) Land or a tract of land considered as the property of the public in which all persons enjoy equal rights. A property not owned by individuals but by groups; (b) In a home (villa) unit or flat development that part of the property owned and used in common by all the unit or flat owners or occupiers and which is maintained by the Body Corporate.
CONDITIONS OF SALE - The conditions applicable to a sale contract made between a vendor and purchaser.
CONTRACT - A legally binding agreement.
CONTRACT OF SALE - An agreement relating to the sale of property, which expresses the terms and conditions of sale.
COUNTER OFFER - A new offer as to price, terms and conditions, made in reply to a prior unacceptable offer. Normally the counter offer terminates the previous offer.
DATE OF SETTLEMENT - The date on which a contract of sale is finalised and final payment is made.
DEPOSIT - Percentage of total consideration, or an agreed amount, paid on exchange of contract for purchase of an asset.
DEPRECIATION - (a) In accounting terms, the writing down of the original cost of an asset systematically over the life of that asset; ( b) An effect caused by physical deterioration, or obsolescence, or both; (c) In valuation terms, the writing down of the current cost of an asset to calculate its current value. The accumulated effect on the value of an asset due to physical, functional, technological and economic obsolescence.
DEVELOPMENT APPROVAL - Approval from the relevant planning authority to construct, add, amend or change the structure of a property.
DISBURSEMENTS - Recoverable costs. For example, in the case of real estate sales, expenses paid by an agent on behalf of an owner, such as advertising, rates and taxes.
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 or drainage through private property.
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, restrictions and reservations).
EQUITY - (a) A synonym for a share (as distinct from fixed interest) investment3; (b) the interest or value that an owner has in an asset over and above the debt against it. For example, a home-owner has equity in that part of the value of his or her house above the amount borrowed from a lender.
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. Under the terms of an Exclusive Agency Agreement, the appointed agent is usually entitled to any commission resulting from a transaction relating to the property, even if it is sold/leased by another agent or the vendor during the term of the agreement. Also known as an Exclusive Agency or a Sole Agency.
FITTINGS - Installed items that may be removed from real estate without causing irreparable damage to the land, structure or use of the premises.
FIXTURES - Those parts of a property affixed to structures or land, usually in such a manner that they cannot be independently moved without damage to themselves or the property housing supporting or pertinent to them. Fixtures are usually included in a sale and commonly include items such as carpets and awnings.
FOREIGN INVESTMENT REVIEW BOARD - An Australian Government entity that reviews foreign investment proposals and advises Government on foreign investment policy.
GEARING (LEVERAGE) - A measure of indebtedness i.e. the extent of borrowings as against the equity held by a person or company in an asset. Usually expressed as a ratio. Positive gearing refers to the magnification of financial gain resulting from borrowing when the cost of capital (borrowed) is less than the return on capital and leads to magnification of returns to equity. Negative gearing refers to the same relationships but where the cost of capital exceeds the return on capital. Persons would normally only negatively gear in the expectation of positive returns in the future.
GOING CONCERN - An operating business that will remain in operation for the foreseeable future. It is assumed that the entity has neither the intention nor the necessity of liquidation or of curtailing materially the scale of its operations. Properties sold as a going concern may be treated differently for taxation purposes.
GOODS AND SERVICES TAX (GST) - A consumption tax imposed by the Commonwealth levied on the provision of goods and services.
GUARANTOR - A person who undertakes to fulfil a contract if the main party defaults.
HOLDING DEPOSIT - An amount given by a buyer to the estate agent acting for the seller. It shows the buyer’s serious commitment to the property and is commonly 10% of the purchase price.
INVESTMENT PROPERTY - Property (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 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.
LEASE - An agreement whereby the lessor conveys to the lessee in return for a payment or series of payments the right to use an asset for an agreed period of time.
LESSEE (TENANT) - A person / legal entity who receives the right to occupy and use a property under the terms of a lease.
LESSOR (LANDLORD) - The owner of a property who transfers the right to occupy and use property to another by way of a lease agreement.
LICENSED REAL ESTATE AGENT - A Licensed Real Estate Agent may perform the activities in the conduct of a real estate business. He/she is licensed to hold responsibility for an agency’s legislative compliance activities.
LISTING - (a) A term commonly used by agents for obtaining an instruction to sell or lease real estate; (b) The recording of properties as being available for sale.
MANAGEMENT AGREEMENT - A written contract recording the agreement between the owner and manager of real estate concerning the duties, responsibilities and liabilities of the owner and the manager in the management of that real estate.
MANAGEMENT FEE (PROPERTY) - The fee charged by the property manager to the landlord for the service of managing a property or properties. This service typically includes collecting rents, paying recurrent property expenses, selecting and supervising property service contractors such as cleaners, plant service providers and security. It may also include negotiating new leases, marketing of the property, rent reviews and overseeing building refurbishment. In respect of property trusts, it refers to the fee levied on unit holders by the responsible entity to cover the cost of trust administration.
MANAGING AGENT - A real estate agent authorised to manage the business affairs in connection with the property of another. See also Property Management.
MARKET PRICE - The price actually paid, or agreed in a contract to be paid, for an asset. It differs from market value in that it relates to an accomplished fact, whereas market value is and remains an estimate until proved. Market price may involve circumstances not normally included in 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.
MEDIAN - The middle number when data is arranged from lowest to the highest in sequence. If there are two median scores, they are averaged to provide the true median. The median is also known as the 50th percentile.
MORTGAGE - Documentation of a property loan. Security over real property to ensure payment of a debt or performance of an obligation.
MORTGAGE GUARANTEE INSURANCE - Paid by the borrower to protect the lender against failure by the borrower to keep up mortgage repayments or to pay back the loan in full when it is due.
MORTGAGEE - Financier who lends money against property as security.
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.
MORTGAGOR - One who owns an interest in real estate and who executes a mortgage on that interest as security for a loan or for the advance of credit.
NEGATIVE GEARING - See Gearing.
NOTICE OF TERMINATION - The notice given by either the landlord or tenant that they want to end the rental agreement and vacate the property in compliance with the terms and conditions of the lease.
OFFER - The consideration offered to purchase or lease an asset.
OPEN LISTING - Where a vendor grants selling or leasing rights over a property to any number of agents on a non-exclusive basis. The first agent to procure a buyer ready, willing and able to purchase or lease the property on terms acceptable to the vendor receives the commission. Also known as a Common Listing, Simple Listing or Open Agency.
OUTGOINGS - The expenses incurred in generating income. In real estate, these expenses include, but are not necessarily limited to, property rates, insurance, repairs and maintenance and management fees.
OWNER - In relation to land, the owner includes every person who jointly or severally whether at law or in equity: (a) is entitled to the land of an estate in freehold possession; or (b) is entitled to receive rent or profits thereof, whether as beneficial owner, trustee, mortgagee in possession or otherwise.
PERIODIC LEASE - Where a tenant continues to rent / occupy the property after the lease has formally expired.
PRINCIPAL -( a) A term used in most Australian contracts in lieu of ‘client’ or ‘proprietor’; (b) A licensed estate agent holding responsibility for an agency’s legislative compliance activities including legal responsibility for trust accounts.
PRIVATE SALE - Where an owner offers a property for sale without engaging an agent.
PRIVATE TREATY SALE - A sale negotiated directly between the parties or their agents.
PROPERTY MANAGEMENT - The management of a property on behalf of the owner. For example, the leasing of space, collection of rents, selection of tenants and generally the overall maintaining and managing of real estate properties for clients.
REVERSE MORTGAGE - A mortgage over a residential property owned by a person (usually over 55 years of age), where repayments are not required until the property is sold or the last homeowner dies.
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 - 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.
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. See also individual state legislation.
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 - (a) The formal ownership of property held within a strata plan where property is defined within horizontal and vertical boundaries; (b) A scheme of property ownership where each proprietor owns parts of a building and has joint rights with other proprietors over the land and other common areas.
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.
SURVEY - The measurement and depiction on paper of the boundaries of real estate and the location of the improvements on the land, or measurement of a part of a building, usually undertaken by a registered surveyor.
TENANCY AGREEMENT - A form of lease, generally in an abbreviated form. It may be registered on an owner’s certificate of title.
TENANCY IN COMMON - Ownership that is separate and not held directly with another person. There is no survivorship.
TENANT - A person or entity paying rent in exchange for the occupancy of a building or dwelling. See also Lessee.
TITLE - The form of ownership of real estate (i.e. Torrens, strata or company title).
TITLE DEEDS - Documents evidencing the ownership of property.
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.
UNENCUMBERED PROPERTY - Property free and clear of mortgages, restrictive covenants, leases and assessments of any kind.
VACANCY RATE -The proportion of inhabitable rental premises which are vacant.
VACANT POSSESSION - In real estate this refers to a right to possession of land or built-up property in respect of which there is no current occupant.
VACATE - To give up occupancy; to make vacant; move out of property.
VALUATION - (a) The process of estimating value.5; (b) The prediction of the value of an asset at a point in time, depending on the purpose for which the valuation is required.
VALUATION REPORT - A document that records the instructions for the assignment, the purpose and basis of the valuation, and the results of the analysis that led to the opinion of value. A Valuation Report may also explain the analytical processes undertaken in carrying out the valuation, and present meaningful information used in the analysis. Valuation Reports can be either oral or written. The type, content and length of a report vary according to the intended user, legal requirements, the property type, and the nature and complexity of the assignment. The terms, Valuation Certificate and Valuation Report, are sometimes
VALUER - A person who is: (a) registered / licensed / approved to carry out property or plant and machinery valuations under any State, Territory or Commonwealth legislation; and / or (b) a member of the Australian Property Institute who is accredited as a Certified Practising Valuer.
VARIATION - An addition to, omission from, or alteration to a contract or to the contract conditions.
VENDOR - One who sells anything. In real estate transactions, the person(s) or entity selling the property.
ZONING - A local planning tool to control the present and future development of land including residential, business and industrial uses.