Real Estate Jargon: All the lingo you need to know

Buying, selling, or just looking, but no idea what we’re talking about? At Ray White Hawke’s Bay, our clients are our number one priority. If that means giving you a wee dictionary to support you on your journey, then here you go! Sharpen your pencils, below is all the real estate jargon you need to know for your property journey.

Adjustment
The division of expenses relating to a property, such as water and land rates, between the vendor and purchaser.

Agreement
A written or verbal contract between the vendor and the purchaser for the sale and purchase of property

Allotment
A portion of land (lot, block, section) divided from a larger land area.

Appraisal
A written analysis of the estimated value of a property prepared by a qualified appraiser based on the comparable sales of similar homes in the area.

Appreciation
The increase in the value of a property over time – due to market changes such as: supply and demand; inflation; and other factors.

Asset
Items of monetary value owned by an individual.

Auction
A pubic sale of a property where the highest bidder wins the right to purchase a property once a vendor-set reserve is met.

Body Corporate
A legal entity/committee selected by unit/apartment owners within a strata-titled property to handle the upkeep and maintenance of the site (particularly common areas.)

Bridging Finance / Bridging Loan
A short term (often high interest) loan obtained by those who must close a purchase on a new property and are still awaiting the sale of a current property.

Building Regulations
Regulations formulated by local councils to control the quality of buildings constructed in terms of public health and safety.

Buyers Market
When the purchaser holds advantage within the property market due to supply of property exceeding the demand.

Capital
(1) Money used to invest in a business or an income property to create income.
(2) Money or property that comprises the wealth owned or used by a person or business.
(3) The accrued wealth of a business or person.
(4) The net worth of a business represented by the amount its assets exceed it.

Capital Gain
The profit gained when a house or business is sold above the original purchase price.

Cash-Out Clause
A contractual clause requiring a purchasers’ offer to go unconditional within a set time-frame, otherwise terminate, should a cash offer be made by another interested party.

Caveat
A document lodged to the Titles Office by any person with legal interest in a property to ensure the property is not sold without their knowledge. Warns a purchaser that a third party might have some interest or right in the property.

Certificate of Title
A document showing legal proof of ownership of a property – containing registered ownership details, and description of the property.

Chattels
Non-fixed/removable items in a property such as: carpets, curtains, blinds, stove, light fittings and television aerials. Unless chattels are specified in a sale and purchase agreement, they are not sold as part of the property.

Commission / Service Fee
A fee (usually a percentage of the sale price of the property) paid by the vendor to a real estate agent for their services, including the negotiation of the real estate transaction.

Common Property
Areas of buildings, land or amenities within a strata title/unit-title property shared by all owners such as: driveways; stairwells and footpaths.

Conditions
These are the terms requested (usually by the purchaser) to be met or satisfied in order for settlement to proceed and often include a request for a building inspection, finance approval, and Certificate of Title checks.

Conditional Agreement
A legally binding contract with conditions that must be met prior to settlement – eg. finance approval.

Contract of Sale
A written agreement stating the terms and conditions of a property sale.

Conveyancing
The legal process in which ownership of a property is transferred from one party to another.

Cross Lease
A piece of land housing more than one dwelling where the land is owned collectively by all the people residing on the land. Each person leases, and usually have exclusive use of, a specific area of the land.

Covenant
Terms, conditions and restrictions affecting the use of land or property written into the title – which may affect the future use and sale of the land or property.

Deed
The legal document conveying title to a property.

Deposit
A percentage of the purchase price of a property placed in trust to bind the sale of real estate. This money then goes toward the purchase price once the sale is finalised.

Depreciation
A decline in the value of property due to changes in the market.

Drawdown
Payment of the loan proceeds by the purchasers’ bank to the vendor.

Easement
A right giving persons other than the owner access to part of a property, eg: access to sewerage or water mains by local council can be covered by an easement.

Equity
The amount of an asset that you actually own. The equity in a property is the difference between the market value of the property and the amount still owing on the mortgage on the property.

Escape Clause
A contractual clause which allows the vendor to accept another offer on a property, therefore forcing a current offer to perform or terminate.

Exclusive Agency/Sole Agency
A written contract between vendor and real estate agent giving that specific real estate agent the exclusive right to sell/market a property for a set period of time.

Flat Interest Rate / Fixed Rate Mortgage
A calculation made on the original amount of the mortgage for the whole term of the loan. This calculation, called the ‘interest rate’, does not change during the entire term.

Fixtures
Items that are permanently attached to the property and cannot be removed without considerable damage – such as cupboards or shelves.

Freehold
An owners’ interest in land where the property and the land on which it stands both belong to the owner indefinitely.

Gross Income
Total income before taxes are deducted.

Guarantor
A secondary party who guarantees an obligation made by another party, and therefore has legal duty to fulfil it. In the case of the loan on a property, a Guarantor is a person who agrees that the borrower of the loan is able to meet their loan repayments, and if the borrower defaults, then the Guarantor on that loan is legally obligated to repay the borrowers’ debt.

Habitable
Suitable for occupancy. Local building codes ensure that structures comply with building permits and certificates of occupancy to ensure a liveable environment.

Interest Only Loans
Interest on a principal amount is repaid throughout the course of the loan, and the principal paid at the end of the term.

Investment
The purchase of an asset, such as real estate, intended to be sold for a profit.

Investment Property
A property, generally not owner-occupied, which provides a monetary return to the owner through leasing or letting to tenants.

Joint Tenancy
A form of ownership where a property is wholly and equally owned by two or more parties. In the event of death the survivor/s retain ownership of the property.

Land Information Memorandum (LIM)
A report issued by the Local Authority outlining everything they know about the property, eg: consents, rates owing, drainage problems.

Lease
A written agreement between a property owner and a tenant granting possession of the owners’ property to the tenant for a set period of time and subject to specific conditions.

Leasehold
The right to hold or use property for a fixed period of time at a given price, without the transfer of ownership, on the basis of a lease contract.

Liabilities
A list of outstanding debts a person/entity owes.

Liquid Asset
A cash asset or an asset easily converted to cash.

Listing
A written contract between a property owner and a real estate agent, authorizing the agent to perform services involving the owners property – such as marketing their property for sale.

Loan
A sum of borrowed money generally repaid with interest.

Market Value
A sale price that satisfies both the vendor and purchaser. An appraisal aims to establish this market value.

Median Sale Price
The sale price of the middle property, in a designated area, when all sales in for that area are ranked in price order from lowest to highest.

Maturity Date
The date on which a loan agreement becomes due and payable, or the agreement renewed.

Mortgage
A legal agreement on the terms and conditions of a loan for the purpose of buying real estate.

Mortgagee
A person or entity who lends the money in a mortgage agreement.

Mortgagor
A person or entity who borrows money to purchase in a mortgage agreement.

MREINZ
Member Real Estate Institute of New Zealand. This institute provides training and sets the standards and codes of conduct under which agents are expected to operate in New Zealand. Every real estate agent in New Zealand should be a member.

Negotiation
An attempt to produce a mutually agreeable contract or outcome between two parties following an offer.

Off the Plan
To purchase a property prior to its completion, only having seen the plans.

Offer
A legal agreement which offers a specific price for a specific property. The offer may be subject to conditions (conditional offer) or not (firm offer.)

Option to Buy
A legal agreement which allows the purchaser the right to buy property at a specific price and time. A fee is generally payable and not refunded should the purchaser not complete the transaction.

Passed In
The highest bid fails to reach reserve price during auction and therefore does not sell.

POA
An abbreviation simply meaning “price on application.”

Pre-Qualification
Completing a process to determine how much money a prospective purchaser will be eligible to borrow before they apply for a loan.

Principal
The total amount of money that was borrowed to purchase a property, or the amount that still remains to be paid.

Private Sale
The vendor deals directly with the purchaser and does not engage with an agent during the transaction, and instead must take sole responsibility for the sale of their property and all legal matters.

Private Treaty Sale
The sale of property utilising a real estate agent, and via the process of private negotiation.

Real Estate Agent / Consultant
A person licensed with a Real Estate Institute to negotiate real estate transactions on behalf of a property owner/s.

Requisition of Title
A request put forward by the purchaser asking for additional information about the title of the property from the vendor.

Reserve Price
The minimum price the vendor will accept for the sale of their property at auction.

Sale and Purchase Agreement
A legally binding contract between the vendor and purchaser for the sale and purchase of a property.

Sellers Market
When the demand for property is greater than the supply. This is often a beneficial time for vendors to sell property.

Semi-Detatched
A construction where two buildings are attached by a common wall.

Settlement
The final step in a property transaction. The sale of the property is finalised by the legal representatives of both the vendor and the purchaser. The new owner receives the keys and takes possession of the property.

Sole Agency / Exclusive Agency
A written contract between vendor and real estate agent giving that specific real estate agent the exclusive right to sell/market a property for a set period of time.

Strata Title / Unit Title
A title that gives you ownership of a small piece of a larger property – most commonly used for flats and units. It provides the sole right to a particular unit which you can lease, sell or legally dispose of at your desire. You also have an undivided share of any common land and become a member of the Body Corporate which controls maintenance of common areas.

Subdivision
An area of land divided into smaller lots for a property development.

Survey
A detailed diagram outlining precise legal boundaries of a property, the location of improvements, easements, rights of way, encroachments and other physical features.

Tenancy
The right to occupy property under agreed terms and conditions.

Tenant
A person legally permitted to occupy property under terms and conditions established with the property owner.

Tender
A process of selling where prospective purchasers present their best offer confidentially and in writing by a set date. This process is similar to an auction, however the monetary amount of other offers remain undisclosed until the tender closes and the vendor is able to select the most favourable offer. As no price is advertised, purchasers must establish their own value for the property.

Term
The time length of a home loan.

Title
A legal document that proves a person’s right to ownership of a property.

Title Search
The process of examining the title records to ensure the vendor is the legal owner of the property and that there are no other claims, or caveats, thus establishing that the owner has the right to transfer ownership of the property.

Transfer
A document recording change of ownership registered in the Land Titles Office.

Unconditional Agreement
A legal contract binding both the vendor and purchaser to a mutually agreed settlement price and date.

Unencumbered
When a property is free of mortgages, caveats and other restrictions.

Utilities
Service facilities (public or private) provided as part of the development of the land such as gas, electricity, water and sewerage.

Valuation
A written report produced by a registered valuer, estimating the value of a property.

Variable Rate Loan
A loan with a rate of interest that changes as the money market changes. The repayments on the loan will change according to the interest rate changes – so, if the rates are low your repayments will be low, and visa versa.

Vendor
The person offering a property for sale.

Zoning
Guidelines produced by the local authority for the permitted use of land areas.