A, B, C, Easy As Aussie Real Estate Terminology

Okay, it's not as simple as do re mi but it's manageable.

Here's a full list of real estate terms and jargon that are commonly used in Australia.

Here we go!

Abut

To touch or border on. For example, a property could “abut” onto a highway or share a common boundary with another property.

Acceleration Clause

A clause in a mortgage document which requires the immediate repayment of the entire balance at any given time should there be a breach of the conditions of the mortgage. This could be for defaulting on a mortgage repayment or if the property does not have building insurance.

Agents In Conjunction

In real estate transactions an agency conjunctional relationship may be created by either:

(a) From specific instructions received from the vendor or purchaser to act in conjunction, or

(b) Where an agent acting on behalf of a vendor or purchaser allows another agent to introduce a purchaser or vendor – or vice versa – the agents are said to be acting in conjunction. In some states it is known as Agents in Association.

Usually in these circumstances the agents will share a predetermined proportion of the total commission.

Allotment

A small area of land sufficient for building a house. An allotment is also referred to as a building block, lot or block of land.

Amortisation Period

The number of years it will take to fully pay off a home loan.

Appreciation

An increase in the value of a property.

Bank Valuation

A bank’s estimate of a property’s value. This is often more conservative than the actual market value.

Bid 

A verbal or written offer to purchase.

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.

Bridging Finance

A short-term loan used to allow a buyer to purchase a new property if the proceeds of a property he or she recently sold have not yet cleared.

Building Consultant

An expert experienced in designing and/or constructing buildings. When employing such a person for a pre-purchase report on a property, inquire whether he or she has indemnity insurance to cover any serious defects that the report may overlook. A building consultant is not required to be registered but many are registered as domestic builders, commercial builders, draftspeople, inspectors, surveyors, or engineers.

Building Inspector

A local government officer who is responsible for checking buildings in the course of construction and completed buildings to ensure that they have been constructed in accordance with building control provisions.

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 Gains

The profit on the sale of a capital asset, such as a house.

Caveat

A notification on the title declaring a party other than the owner may have an interest in the property.

Caveat emptor

Latin for “buyer beware”. In a property transaction, the purchaser carries the risk. In other words, do your homework.

Certificate Of Title

A document issued by a title office under a Torrens System of Title, showing ownership and interest in a parcel of land.

Captial Gains Tax (CGT)

Capital gains tax. In real estate terms, this is a tax levied on profit from the sale of an investment property (not the family home).

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.

Cooling Off Period

A period after the contract is made (usually 5 days in NSW), when the purchaser may cancel the contract.

Counter Offer

A new offer, made after a previous offer has been rejected by the owner.

Cul-de-sac

An access street with a blind end in the form of a turning space for vehicles.

Deposit

Percentage of total consideration, or an agreed amount, paid on exchange of contract for purchase of an asset.

Depreciation

A reduction in the value of an asset over time.

Disbursements

Money paid out. Expenditures, e.g. advertising expenses, rates and taxes, insurance, etc., paid by an agent on behalf of an owner.

District

An area having a common characteristic use (such as a retail district, residential district, etc).

District Business Centre

A term used to describe the hub of a main shopping centre in a city or suburb. It is much more extensive than a daily needs shopping centre.

Due Diligence

An investigation of the legal, financial and physical nature and characteristics, including the entitlements and liabilities attaching to and arising from a real estate asset or assets, usually for acquisition or compliance purposes.

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. Some form of compensation may be payable.

Equity

The value an owner of a property has in the asset above the debt owed.

Exchange Of Contracts

The legal process that creates a binding agreement for the sale of a property. A deposit is usually paid at this time, and may be forfeited if either party backs out of the agreement.

Exclusive Listing

When a vendor has signed an agreement to make an agent solely responsible for the sale of a property during a specified period. If another agent sells the property during that time, the original agent is entitled to any commission.

Foreign Investment Review Board (FIRB)

Reviews any proposals for foreign investment in Australia and advises the government on relevant foreign investment policy.

First Refusal (Right Of)

The right granted to a person to have the first privilege to buy or lease real estate, or the right to meet any offer made by another.

Fittings

Items in a home that can be taken out without damaging the items or the space in which they were located. Includes washing machines, refrigerators and other items not usually included in a property sale.

Fixtures

Items fixed to a property in a way that would damage the item or the structure of the property if they were to be removed, such as built-in shelving or carpets. Usually included in the sale of a property.

Gazumping

Where the vendor agrees to sell a property, but then sells it to another party on more favourable terms.

Guarantor

Someone who agrees to fulfil a contract if the main party to the loan 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, but is not compulsory and is refundable if the offer is rejected.

Household Insurance

Insurance against all risks including theft, weather damage and fire. Because the purchaser becomes the legal owner immediately on the exchange of contracts, household insurance should be taken at this point.

Insulation

A heat-retarding material applied in outside walls, top-flooring ceiling or in roof to prevent passage of heat or cold into or out of the house.

Interest

The amount paid by a borrower to a lender in addition to the main amount borrowed (the “principal”). The interest rate can be fixed, variable or a combination of the two (“split loan”).

Interest-Only Loan

When only the interest is repaid during the term of a loan. The principal is repaid after the loan term expires.

Joint Tenancy

Joint tenancy is the holding of property by two or more persons in equal shares. If one person dies, his/her share passes to the survivor. 

Land Tax 

A tax payable annually in respect of the beneficial ownership of land, the rate of which is determined by the assessed valuation. Usually based on unimproved value of land.

Lenders Mortgage Insurance (LMI)

Lenders mortgage insurance. Often payable when a borrower doesn’t have a big deposit, it’s designed to protect the lender against default.

Loan-to-value ratio (LVR)

The proportion of money borrowed versus the value of a property. When the LVR is high (over 80 per cent, for example), a lender is more likely to charge lenders mortgage insurance.

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 Protection Insurance

An insurance policy which covers a borrower’s mortgage repayments in the event of illness or injury.

Negative Gearing

When the earnings from an investment property are – in the short-term, at least – less than the costs associated with the investment. The shortfall can be used to reduce tax liability in Australia, for now.

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.

Offset Account

In a mortgage offset account or home loan offset account, the credit in the account is offset daily against the home loan balance, reducing the interest charged accordingly.

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.

Option

(a) The right to buy or sell a fixed quantity of a commodity, currency or security at a particular date at a particular price (the exercise price);

(b) A right given for a consideration to purchase property on or before a fixed date, on terms previously agreed upon. An option entitles, but does not oblige, the person having the option to make the purchase;

(c) An option in a lease refers to a further term of tenancy.

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.

Owners Corporation 

See Body corporate.

Parcel

A piece of land, regardless of size, in one ownership.

Practical Completion

The stage reached when a project has been essentially completed and is fit for its intended purpose, except for minor omissions and defects that do not prevent its use, and with tests required under the contract having been carried out. Practical completion is marked by the issue to the contractor of a certificate of practical completion.

Prefabricated House (Prefab)

A house, manufactured, and sometimes partly assembled before delivery to the site.

Rescind

To terminate a contract of sale.

Reserve Price

The lowest price a vendor has agreed to accept.

Reverse Mortgage

A type of mortgage, usually used by older homeowners, where repayments don’t need to be made until after the property is sold, or the last homeowner dies.

Settlement Date

The date on which a property sale is finalised. The purchaser pays the vendor and gains possession of the home at this time.

Stamp Duty

Tax levied on a contract, calculated as a percentage of the contract value. Varies between states and territories.

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.

Survey

The measurement of a property to confirm where its boundaries are, and what improvements have been made to it.

Title

The type of property ownership, for example Torrens title, strata title or company title.

Trust Account

A bank account managed by an agent where funds (such as deposits and rental income) are held on behalf of someone else.

Urgent Repairs

Repairs that must be made to a property to ensure that it is ‘fit to live in’.

Valuation

(a) The process of estimating value.

(b) The prediction of the value of an asset at a point in time, depending on the purpose for which the valuation is required.

Vendor

One who sells anything. In real estate transactions it is the person selling the property.

Yield

The annual rental income of an investment property, expressed as a proportion of the property’s value.

Zoning

An urban planning tool used by local governments to determined how land is to be used. Examples include low density residential, high density residential, mixed use and metropolitan centre.

Happy hunting!

If you have any questions on Sydney real estate, feel free to contact me via helen@sydneyrealestategirl.com speak soon!