The process of buying or selling real estate in Australia is simplified with the use of a realtor. However, it’s still important to understand the terms used when discussing real estate contracts and the closing process. If your realtor uses unfamiliar terms, it’s important to ask exactly what they mean.
Terms for Both Buyers and Sellers
While there are terms specific to buyers and terms specific to sellers, many terms should be familiar to both parties. Here are some terms both buyers and sellers should be familiar with when involved in a real estate transaction.
- Access Rights – these are the rights granted on a piece of property that juts over an existing street or highway. The owner’s right to enter and leave the property is detailed on the title.
- Assessed and Taxable Value – this is the value, as determined by law, that it taxable on a piece of real estate.
- Bid – an offer, usually in writing, detailing the desire to purchase a piece of property. The buyer will submit a bid and a seller can choose to accept it or counteroffer with new conditions or price terms.
- Certificate of Title – this is given by the Torrens System of Title and is transferred from the seller to the buyer upon settlement.
- Market Value – this is the value given to a piece or real estate before it sells. When it sells, the price at which it sells is considered the market price.
- Principal – a term used in many Australian contracts instead of the term client.
Terms for Buyers
Below are some terms buyers should be familiar with when purchasing an Australian home.
- Acceleration Clause – this is a clause in the mortgage documents that specifies if a buyer fails to make a payment the mortgage is immediately due in full.
- Assumption of Mortgage – this is a type of purchase where the buyer takes over an existing mortgage and becomes responsible for paying that mortgage off in full.
- Buyer’s Market – this means that there are more homes listed for sale on the market than there are people who want them. This means sellers will be competitive when handling bids.
- Buyer’s Agent – an agent who represents the buyers and handles all matters of the purchase for the buyer.
- Cooling Off Period – a period of time where the buyer may back out of current contracts without any consequence.
- Fixed Interest Rate – a rate that remains constant for the duration of a loan.
- Holding Deposit – usually 10% of the purchase price to show a good-faith commitment to the purchase of the home. The buyer will present this deposit to the seller’s agent.
Terms for Sellers
- Agents in Conjunction – when a seller uses more than one agent to sell a piece of real estate and share the commission.
- Effective Cause of Sale – this means that a particular real estate agent was responsible for the cause of a sale and is entitled to some form of commission.
- Exclusive Listing – when a seller grants rights to one agent to sell a home and become entitled to the commission.
- Gazumping – when a seller agrees to sell a piece of real estate but then sells it to someone else who offered betters terms and conditions.
- Open Listing – the seller grants rights to a number of agents to sell the listing. The first agent to find a buyer gets the commission.
- Passed-In – this is a term used when a piece of property doesn’t sell at auction because the reserve price wasn’t met.
- Settlement – when the buyer pays off the remaining amount to the seller and the property officially becomes the buyers.
There are a number of other terms that realtors use to describe the market. However, it’s important to understand the most common terms that get spoken a lot during a deal. Knowing what your realtor and the other professionals around you are discussing will give you the confidence that the sale or purchase will be successful.
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