Understanding Real Estate Terms and Jargon
While you don’t need to be an expert, you do need to have an understanding of the jargon and legal terms that you will encounter in the process of selling or buying your home. In understanding these terms, you and your agent will be able to communicate effectively.
- Licensed Agent
A Licensed Estate agent can be either a company or an individual, either of which is licensed to operate a real estate agency. They are authorised to act on behalf of property owners in the sale or letting of property
- Agent’s Representative
Is someone who can list, sell or manage property for property owners but must come under the “umbrella“of a licensed estate agent.
- Contract of Sale
This is a written agreement that details the particulars of the sale, such as price, deposit, settlement date plus any special conditions that have been agreed to. In Victoria the contract of sale is a standard document in a form used by all agents and solicitors. It’s important to note that even if terms have been agreed to, a sale is not binding or enforceable until a sale contract has been signed by both the seller and the buyer.
- Vendor Statement
Often referred to as a Section 32 Statement, the Vendor Statement provides basic information about a property such as services available, title details, zoning, outgoings (ie council rates) plus any notices affecting the property. It’s a requirement that the Section 32 Statement be attached to the Contract of Sale.
An offer made by a buyer to purchase a property and usually containing details of price, settlement and conditions ie finance approval. An offer can be verbal, however, offers made in writing on the prescribed sale contract will usually carry more weight, and be taken more seriously by a vendor.
Acceptance by the vendor of the terms and conditions contained in an offer made by a purchaser.
A deposit is usually required at the time of signing a Contract of Sale. Generally the amount required will be 10% of the purchase price, but can be either more or less as agreed between the parties.
A Contract of Sale will usually specify a settlement date which is the date set for the payment of the balance of the purchase price and the date on which ownership of the property changes hands from the vendor to the purchaser.
- Cooling Off
Section 31 of the Sale of Land Act provides most purchasers (there are some exceptions), with a 3 day cooling off period. This allows 3 clear business days from the date they signed a formal offer on a sale contract, for a purchaser to exercise their right to change their mind. Exercising this right may involve paying a “Cooling Off fee” to the vendor and you should seek your own advice in this matter.
- Private Sale
The process by which a property is advertised for sale with a set asking price or a price range. Buyers can make offers and include one or more special conditions if they wish, such as finance approval, building inspection or pest inspection.
The process by which a property is offered for public sale at a set date and time. Auctions are conducted by an experienced auctioneer, who controls the proceedings by taking successive bids from those competing to purchase the property. The Vendor will in most cases have set a “reserve price” and the property will be sold to the highest bidder whose bid is at or above the reserve price.
If the bidding doesn’t reach the reserve price the property will be “passed in” and the auctioneer is required legally to first negotiate with the highest bidder at the vendor’s reserve price before negotiating with any other party.
- Reserve Price
This is the price set by the vendor before the auction and represents the lowest price at which the vendor is prepared to sell. It is not required that the reserve price be disclosed, however, the auctioneer will usually indicate when the property is on the market ie the reserve price has been reached or exceeded.
- Trust Account
An account in which all deposit monies and pre-paid advertising funds must be deposited. As the name suggests, all monies are “held in trust” on behalf of third parties. Trust accounts are audited on a regular basis and payments out are strictly controlled.
- Section 27 Deposit Release
In some instances the Sale of Land Act will allow for the deposit paid by the purchaser and being held by the Vendor’s agent or solicitor, to be released to the Vendor prior to settlement occurring. It isn’t possible in all circumstances and you should seek advice from your solicitor.
If you do find yourself still scratching your head about any real estate terms or abbreviations, give us a call and we can talk you through it.