Thursday 14 April 2016

Real Estate Language

It’s easy for those of us who work in real estate every day to forget that the general public, who maybe buy or sell only a handful of properties in a lifetime, aren’t always well versed in real estate terminology. There is a language that is specific to the world of real estate, from terms involved with listing properties to the language of a real estate contract. The more accessible we can make that language to our clients, the more comfortable and at ease they are going to be during the process.

Here are some basic terms you may hear mentioned when talking about property sales:

Conditional: “It’s still conditional” – this means that there is an offer to purchase which has been accepted by the seller, and the buyers and/or sellers are now working through the items they placed as subject conditions on the offer to purchase; this is referred to as the due diligence period. There is a set date for these conditions to be removed and if they are the contract will then be considered unconditional. When a contract is in its conditional phase, there is a chance that the purchase may not go through, as the conditions may not be satisfied.

Subject-Free: This relates to the conditions set on a contract (or perhaps there are no conditions). When all subject conditions have been waived or removed and both parties are in agreement then a deal is considered ‘subject-free’ and buyer and seller are obligated to complete the deal as outlined in the contract.

Deposit: While the concept of the deposit is fairly obvious, clients don’t always understand that the deposit will form part of the agreed upon purchase price if the sale goes ahead and is not a separate, stand-alone amount of money.

Appraisal vs Assessment: An appraisal of a property is done by a professional third party accredited appraiser and provides the property’s value as set out in the scope of the appraisal (if it is for market value or lender value for example). An assessment is provided for the local municipality as value of the property and is used to apply taxes to the property.

Commission: The gross commission for a listed property is determined at the time of the listing. If there is one agent for the sellers and one agent for the buyers, they will share that gross commission in a pre-determined way (also set out in the listing contract for the property). The gross commission is paid by the seller upon the receipt of funds for the sale of the home, and both agents are then paid from that monies.

The best advice when it comes to dealing with real estate and the language is to ask lots of questions. Your real estate agent is there to assist you, and explaining things you don’t understand is part of the job.

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